Majority of Ontario Pension Plans Remained Strong in 2022
Most pension plans in Ontario have been resilient through a year filled with challenges and market volatility.
According to the Financial Services Regulatory Authority of Ontario’s (FSRA) Q4 2022 Solvency Report, pension fund investment returns for the quarter were just under three percent while pension plan liabilities continued to benefit from a rising interest rate environment. The majority of plans remained fully funded on a solvency basis at December 31, 2022. In fact, the median solvency ratio at the end of 2022 returned to the all-time high level it reached earlier in 2022.
“This past year has been difficult as the global economy experienced high inflation, rising interest rates and ongoing market volatility, however the majority of Ontario pension plans remained in a well-funded position in 2022,” said Caroline Blouin, FSRA Executive Vice President, Pensions. “With that being said, we encourage all plan sponsors and administrators to continuously monitor market conditions and manage the plan risks for the years ahead to maintain benefit security for plan members.”
The key findings of the Q4 2022 Solvency Report include:
- The median projected solvency ratio was 112% as at December 31, 2022 – returning to its all-time high – a 3% increase from 109% as at September 30, 2022.
- The percentage of pension plans that were projected to be fully funded on a solvency basis as at December 31, 2022 was 81%. The percentage of plans falling below an 85% solvency ratio was 2%, decreasing by 1% from the end of last quarter.
- The average fourth quarter pension fund investment returns for 2022 were 2.9% gross and 2.7% net.
Solvency monitoring is one supervisory tool FSRA uses to improve outcomes for pension plan beneficiaries and proactively engage in a dialogue with plan sponsors.
FSRA continues to work on behalf of all stakeholders, including consumers and pension plan members, to ensure financial safety, fairness, and choice for everyone.
Learn more at www.fsrao.ca.
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Financial Services Regulatory Authority
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