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The average projected solvency ratio for Ontario defined benefit pension plans was 119 per cent as of Dec. 31, 2023, up two per cent from Sept. 30, 2023, according to a new report by the Financial Services Regulatory Authority of Ontario.

It found the median projected solvency ratio exceeded 100 per cent for 12 consecutive quarter ends starting from March 31, 2021. Indeed, nearly 90 per cent of plans had a solvency funded ratio above 100 per cent as at Dec. 31.

Read: Ontario DB pension plans’ average solvency ratio increased to 117% in Q3 2023: FSRA

The percentage of pension plans projected to be fully funded on a solvency basis at the end of the fourth quarter in 2023 rose to 89 per cent from 85 per cent in the third quarter. However, the percentage of plans funded between 85 per cent and 100 per cent solvency ratio decreased to nine per cent from 13 per cent. Notably, the percentage of plans falling below an 85 per cent solvency ratio remained at two per cent.

As well, the estimated average gross and net returns for DB plans in Ontario was 10.1 per cent and 9.9 per cent, respectively, buoyed by a substantial increase in equities during the fourth quarter. By contrast, bond yields decreased and steepened.

“It is encouraging to see the ongoing strength of defined benefit pension plans in the face of this global economic uncertainty and volatility,” said Andrew Fung, acting executive vice-president of pensions at the FSRA, in a press release. “The results of our fourth quarter report are certainly positive for pension members. But I encourage plan sponsors and administrators to remain vigilant and continue to pay close attention to the potential risks and their robust strategic planning.”

Read: Ontario DB pension plans return 0.7% in Q2 2023: FSRA