2017 Report on the Funding of Defined Benefit Pension Plans in Ontario - 14th Annual Report

This is FSCO’s 14th annual Report on the Funding of Defined Benefit Pension Plans in Ontario [PDF Document] Size: ## kb.

 

As part of FSCO’s efforts to deliver on our mandate to provide regulatory services that protect the public interest and enhance public confidence in the pension sector, this report provides pension stakeholders with funding, investment and actuarial information on the Ontario registered defined benefit (DB) pension plans we regulate.

 

The Report uses data from the latest filed funding valuation reports (AR) and Actuarial Information Summaries (AIS) with valuation dates between July 1, 2014 and June 30, 2017 and financial statements and Investment Information Summaries (IIS) for plan years ending in the period from July 1, 2016 to June 30, 2017. The trends analysis is based on data from ARs with valuation dates between July 1, 2013 and June 30, 2017.

 

Highlights of the Report include:

 

  • the median going concern funded ratio improved for the fifth consecutive year to reach 111% as at December 31, 2017;
  • the percentage of underfunded plans on a going concern basis decreased to 22% from 30% in the 2016 Report [PDF Document] Size: ## kb;
  • the projected median solvency ratio improved to 96% as at December 31, 2017 versus 91% as at December 31, 2016;
  • while there was no significant change to the overall allocation between fixed and non-fixed income, alternative assets as a proportion of the asset mix of pension funds grew to 8.4% from  7% as reported in the 2016 Report [PDF Document] Size: ## kb; and
  • larger pension funds tend to allocate more assets to real estate and alternative investments, and less to bonds and equity – on average, pension funds with over $1 billion in assets invest 15.7% in real estate and alternative investments combined (compared to an average allocation of 10.5% for all plans combined).

Temporary solvency funding relief measures continue to be in place as summarized below:

 

  • Specified Ontario Multi-Employer Pension Plans (SOMEPPs)
    Regulation changes in 2007 exempted SOMEPPs from solvency funding on a temporary basis. This temporary exemption has been extended to the earlier of the date on which section 81.0.2 of the Pension Benefits Act (“Conversion to Target Benefits”) comes into force and January 1, 2024.    
  • Certain Private Sector, Single Employer Pension Plans
    Regulation changes in 2009, 2012 and 2016 provided temporary solvency funding relief for DB plans meeting certain eligibility requirements. The 2016 relief measures apply to the first valuation report filed with a valuation date on or after December 31, 2015, and before December 31, 2018. A June 2017 transitional funding measure for DB plans applies to the first valuation report with a valuation date between December 31, 2016 and December 30, 2017.
  • Certain Public Sector Pension Plans
    Regulation 178/11 implemented solvency funding relief measures in 2011 for certain pension plans in the public sector and broader public sector. These measures were extended and expanded between 2013 and 2017. The funding relief is provided in stages. At the end of Stage 1, if a plan demonstrated that sufficient steps had been taken towards sustainability, it would be eligible to enter Stage 2 of the process. 25 pension plans had seek relief, although one plan has exited from coverage. As of March 2018, 23 pension plans are in Stage 2 coverage.

Lester Wong
Deputy Superintendent

 

For more information on this report, please contact:
PensionInquiries@fsco.gov.on.ca

 

Previous Reports: 

 

 

May 2000 Paper on Risk-Based Supervision of Pension Plan Funding [PDF Document] Size: ## kb
 

3rd Quarter Update - Estimated Solvency Funded Status of Defined Benefit Plans in Ontario
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