The median solvency ratio of Canadian defined benefit pension plans reached 129 per cent at the end of the third quarter 2025, up from 126 per cent, according to a new report by Mercer.
The increase was attributed to positive returns on equities and fixed income, despite increased liabilities.
Read: FSRA finds Ontario DB plans’ average solvency ratio increasing to 122% in Q2 2025
Three in five (64 per cent) DB pension plans reported a solvency ratio above 120 per cent in the quarter, representing a 59 per cent increase from the start of the reporting period. The number of DB plans with a solvency ratio above 100 per cent also improved from 89 per cent to 91 per cent.
“During a quarter marked by tariffs and trade disruptions, continued stock market highs and unease in the Canadian economy, the overall financial health of DB pension plans for Canadian workers continues to be generally secure from solvency perspective,” said Jared Mickall, a principal and wealth practice leader at Mercer, in a press release.
Expectations for a weaker economy in Canada are pushing DB plans to evaluate their risk management framework to adapt in an evolving economic environment, he added.
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In a separate report by Aon, the aggregate funded ratio for Canadian pension plans in the S&P/TSX Composite Index increased to 112.5 per cent in the quarter, up from 107.8 per cent.
Investment assets grew 5.4 per cent during the reporting period. The long-term Government of Canada bond yield increased 11 basis points relative to the previous quarter rate. However, credit spreads narrowed by seven basis points in the quarter.
“While markets have been favourable, it’s important for plan sponsors to remain vigilant and continue exploring strategies to manage and reduce pension risk,” said Nathan LaPierre, partner wealth solutions in Canada at Aon, in a statement.
Read: Average DB pension plan portfolio returns 0.8% in July: report