Estimated solvency ratio results (May 2018)

OSFI regularly estimates the solvency ratio for approximately 370 pension plans with defined benefit provisions that it supervises. The Estimated Solvency Ratio (ESR) results help us identify any solvency issues that could affect the security of members’ promised pension benefits, 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 actual rate of return provided on the Solvency Information Return or an assumed rate of return for the plan. Solvency liabilities are projected using relevant Canadian Institute of Actuaries' commuted value and annuity proxy rates. Expected contributions, benefit payments, and expenses are taken into account and an ESR, based on the estimated adjusted market value of the fund, is then calculated for each plan.

The median ESR for all pension plans was 0.96 as at December 31, 2017, up from 0.91 at the end of 2016. The weighted average ESR for all pension plans was 1.02 as at December 31, 2017, up from 0.97 at the end of 2016. The graph below shows the current and previous ESRs and median ESRs dating back to December 2008.

The bar graph below illustrates the distribution of the ESR results for federal pension plans with defined benefit provisions as at December 31 of each year since 2008. It shows the percentage of pension 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. The most recent ESR results indicated that 63% of defined benefit plans were underfunded as at December 31, 2017, down from 80% at the end of 2016. Also, there has been a decrease in the number of plans that are more significantly underfunded (ESRs below 0.80) from 16% at the end of 2016 to 13% at the end of 2017.