Estimated solvency ratio results (May 2021)

OSFI regularly estimates the solvency ratio for federally regulated pension plans with defined benefit provisions. The Estimated Solvency Ratio (ESR) results help identify any solvency issues that could affect the security of pension benefits promised to members and beneficiaries before a plan files their actuarial report. The ESR results also help identify broader trends.

The ESR results are calculated using the most recent actuarial, financial and membership information filed with OSFI for each plan before the analysis date. Assets are projected based on either the rate of return provided on the Solvency Information Return or an assumed rate of return for the plan. Solvency liabilities are projected using relevant commuted value and annuity proxy rates from the Canadian Institute of Actuaries. Expected contributions, benefit payments, and expenses are taken into account and an ESR based on the estimated adjusted market value of the fund and estimated liabilities is then calculated for each plan.

The median ESR for all 342 plans (down from 348 last year) increased to 0.97 as at December 31, 2020, up from 0.95 at the end of 2019. In contrast, the liability-weighted average ESR for all plans decreased slightly to 1.00 as at December 31, 2020, from 1.01 at the end of 2019. The graph below shows the current and previous ESRs and median ESRs dating back to December 2011.

The most recent ESR results show a reduction in the percentage of plans that were underfunded (61% in 2020 versus 66% in 2019) while the number of plans that were significantly underfunded (ESRs below 0.80) did not change (15%). The bar graph below illustrates the distribution of the ESR results as at December 31 of each year since 2011. It shows the percentage of plans with ESRs below 0.80, between 0.80 and 0.90, between 0.90 and 1.00, and over 1.00 in each year.