The average projected solvency ratio for Ontario defined benefit pension plans was 122 per cent as of March 31, 2024, up three per cent from Dec. 31, 2023, according to a new report by the Financial Services Regulatory Authority of Ontario.

It found 90 per cent of DB plans were projected to be fully funded on a solvency basis at the end of the quarter, compared to 89 per cent as at Dec. 31, 2023.

Read: Ontario DB pension plans’ average solvency ratio increased to 119% in Q4 2023: FSRA

According to the report, the current level of solvency discount rates has led to a significant decline in liabilities for DB plans. This financial environment has contributed to improved funding levels in 2022 and 2023. Indeed, only two per cent of DB plans are falling below an 85 per cent solvency ratio.

As well, the estimated average gross and net returns for DB plans in Ontario was 2.6 per cent and 2.3 per cent, respectively, lifted by strong equity returns and declining inflation. Bond yields increased modestly, with the two-year rate increasing to 4.17 per cent and the 10-year rate increasing to 3.45 per cent.

“Ontarians can rest assured that their retirement savings are well protected as most pension plans continue to perform well despite global economic challenges,” said Andrew Fung, executive vice-president of pensions at the FSRA, in a press release. “However, the economic conditions can change quickly and plan sponsors and administrators must be prepared for future challenges and risks in order to safeguard the interest of plan members.”

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