Canadian Pension Plans' Funded Ratios Rise to 123.3% in Q3 2026…

Event summary

Aggregate funded ratio for Canadian defined benefit pension plans increased to 123.3% in Q3 2026, up from 117.6% in Q2.
Pension assets declined by 1.5% over the quarter.
Long-term Government of Canada bond yield rose by 57 basis points, increasing the discount rate to 5.22%.
Credit spreads increased by 1 basis point, contributing to the higher discount rate.

The big picture

The improvement in funded ratios despite equity market weakness highlights the significant impact of higher discount rates on reducing pension liabilities. This trend provides pension sponsors with greater flexibility to manage risk in an uncertain market environment. The data reflects broader industry dynamics where pension plans are increasingly focused on balancing asset performance with liability management strategies.

What we're watching

Discount Rate Sensitivity: How further changes in bond yields will impact pension liabilities and funded ratios.
Equity Market Weakness: Whether the modest weakness in equity markets will continue to affect pension assets.
Proactive Risk Management: The pace at which pension sponsors will take advantage of strong funded positions to manage risk.