The pension plans reached a 112.5% funded status
The aggregate funded ratio for Canadian pension plans in the S&P/TSX Composite Index saw an increase by the end of Q3 2025, according to a metric by professional services firm Aon plc (Aon).
In its Aon Pension Risk Tracker, it was found that Canadian pension plans’ aggregate funded ratio increased from 107.8% to 112.5%. Apart from this, pension assets have also increased by 5.4%.
Nathan LaPierre, partner for wealth solutions in Canada at Aon, pointed out the strength recorded for the quarter, while still urging vigilance among plan sponsors.
“Asset returns were strong in the third quarter. While markets have been favorable, it's important for plan sponsors to remain vigilant and continue exploring strategies to manage and reduce pension risk,” said LaPierre.
Other findings included the increase of the long-term Government of Canada bong yield, which rose by 11 basis points from the rate recorded in the previous quarter. Meanwhile, credit spreads narrowed by 7 basis points. Both metrics led to the increase in the discount rate by 4 basis points, reaching 4.63%.
The Aon Pension Risk Tracker is an interactive tracker which calculated the aggregate funded position on an accounting basis for companies in the S&P/TSX Composite Index which had defined benefit plans. It has been tracking the data since 2013.
Canadian defined benefit pension plans are one of the types of pension plans available in Canada, which guarantees that plan members will receive a specific amount of monthly retirement income once they reach the age of retirement. It is partially funded by employers and is computed using factors such as number of years of service and average salary earned during an employee’s service in the firm.
