Canadian Pension Plans' Funded Ratio Dips to 111.4% in Q1 2026
Event summary
- Canadian defined benefit pension plans' funded ratio decreased to 111.4% in Q1 2026, down from 112.6% in Q4 2025.
- Pension assets declined by 0.9% over the quarter.
- Long-term Government of Canada bond yield increased by 3 basis points, while credit spreads widened by 6 basis points, raising the discount rate to 4.78%.
- The Aon Pension Risk Tracker, which has monitored this data since 2013, reported the findings.
The big picture
The slight decline in the funded ratio reflects broader market volatility, with strong equity returns early in the quarter followed by declines in March. Despite the uncertainty, the funded position remained relatively stable, highlighting the resilience of Canadian pension plans. The strategic focus for plan sponsors will likely shift towards risk management and outcome optimization in a volatile environment.
What we're watching
- Market Volatility
- How ongoing geopolitical uncertainty will impact pension asset performance and funded ratios in the coming quarters.
- Discount Rate Trends
- Whether the increase in the discount rate will continue and its potential effect on pension liabilities.
- Plan Sponsor Strategies
- The pace at which pension plan sponsors adopt new strategies to mitigate risks and improve outcomes.
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