The average funded ratio of the typical Canadian defined benefit pension plan rose four per cent in the third quarter of 2025 to 134 per cent, according to a new report from Normandin Beaudry.
It found a positive trend has continued throughout the year for Canadian DB plans with the funding ratio increasing five per cent on a year-to-date basis. Higher-than-expected investment returns and relatively unchanged pension liabilities from stable discount rates helped continue pushing DB plans forward in 2025, the report noted.
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The average solvency ratio is also consistently increasing, up five per cent in the quarter and six per cent so far this year, reaching 120 per cent at the end of the quarter. The increase was attributed to investment returns and a decrease in actuarial liabilities due to higher discount rates.
Although investment markets faced a correction period in April, the financial market has reached historic highs enabling most Canadian plans to maintain or even increase surpluses, the report noted. However, ongoing market uncertainty surrounding the lagging impact of tariffs on corporate earnings and highly concentrated equities could push DB plans to be more cautions in the use of surpluses.
The report noted conditions are favourable for risk-transfer activities, including the purchase of group annuities, due to the relatively high level of mid- to long-term interest rates and the strong appetite of insurers.
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