The solvency position of defined-benefit (DB) pensions in Ontario continued improving in the third quarter, according to a new report from the Financial Services Regulatory Authority of Ontario (FSRA).
The provincial agency released a report that estimates the median solvency position improved to 94% as of Sept. 30, up from 90% at the end of June, and 85% in March.
“Solvency positions improved over the quarter … as the market continues to recover from the pandemic-induced shocks in March,” the report said.
Notwithstanding the continued improvement, the solvency position remains below where it began the year, at 99%.
“Despite the rebound in asset values the past two quarters, most plans opened the year in a stronger funded position on a solvency basis,” FSRA said.
The agency also reported that 34% of DB plans are now fully funded, up from 26% in the previous quarter.
Also, the share of plans with solvency ratios of under 85% is down to 26% from 36% in the second quarter.
The improvements have come largely as the global equity markets have recovered ground lost at the onset of the Covid-19 outbreak.
“There remains much uncertainty with respect to the economy as the world awaits the development of effective vaccines and therapeutics to treat Covid-19,” the report said.
“It remains as important as ever for plan administrators to review their funding and investment strategies so they can prudently manage their plans through the cycle.”