May 18, 2017
These are interesting times in the pension sector. The funded position of Ontario pension plans has shown significant signs of strength in late 2016 and early 2017, despite some recent market volatility. This is good news for both plan sponsors and plan beneficiaries.
According to FSCO’s 2016 Report on the Funded Status of Defined Benefit Pension Plans in Ontario Size: ## kb, fewer plans were underfunded on both a going concern and solvency basis than in 2015. The defined benefit plan quarterly solvency ratio estimate was 91 per cent at the end of 2016, up from 83 per cent a year earlier. By the end of the first quarter, that estimate rose to 93 per cent.
According to a report in Benefits Canada , 5,000 people are retiring across Canada each week; that number is anticipated to grow to 8,000 a week by 2020. These figures shine a light on the importance of pension plans and the value they hold for plan members. FSCO’s annual defined benefit (DB) funding report and quarterly updates provide useful and up-to-date funding, investment and actuarial information on Ontario’s registered DB pension plans for plan administrators and other stakeholders.
Plan administrators may want to consider sharing highlights from FSCO’s 2016 report Size: ## kb with members to help them understand how their plan’s funding and investment performance compares with the average for pension plans in Ontario.
While it is difficult to predict the impact of market forces on pension plan assets over the long term, this recent trend on solvency ratios is certainly moving in the right direction. FSCO will continue to monitor pension sector trends and their impact on policy and regulation.
Deputy Superintendent, Pension Division