TORONTO A recent report highlights a significant improvement in the health of Canadian defined-benefit pension plans in 2025, primarily driven by substantial gains in equity markets alongside modest returns on fixed-income investments. The analysis, conducted by Mercer, a renowned pension consulting firm, reveals critical insights into the solvency of these pension plans, indicating a promising financial outlook for both Canadian workers and retirees.
As of December 31, 2025, the median solvency ratio for these pension plans reached an impressive 132 percent, reflecting a seven-percentage-point increase over the year. Notably, the fourth quarter alone contributed three additional percentage points to this positive trend. The solvency ratio serves as a vital measure, assessing the sufficiency of a pension plan's assets to meet its promised benefits, and the figures reported indicate a robust financial security for pension holders.
Moreover, the data reveals that a growing proportion of pension plans is demonstrating enhanced financial health. In 2025, 68 percent of plans within Mercer’s database reported a solvency ratio exceeding 120 percent, a substantial rise from just 55 percent at the beginning of the year. This trend underscores the strengthening financial position of these plans, offering increased reassurance to members regarding their financial futures.
Additionally, the percentage of plans boasting a solvency ratio above 100 percent has also improved, climbing to 92 percent in 2025 compared to 88 percent from the previous year. This consistent upward trajectory highlights a broad-based recovery and augmentation in the financial viability of Canadian defined-benefit pension plans.
The report further contextualizes these positive developments against a backdrop of economic challenges faced by Canada during the year. Despite experiencing trade disruptions and geopolitical risks that often threaten economic stability, the defined-benefit pension plans have managed to flourish. Brad Duce, a principal at Mercer in Toronto, emphasizes that the overall financial health of these plans remains secure from a solvency perspective, providing vital reassurance to Canadian employees and retirees alike.
In summary, the 2025 analysis by Mercer sheds light on the increasingly stable landscape of Canadian defined-benefit pension plans. With significant improvements in solvency ratios and a majority of plans achieving commendable financial standings, the outlook appears bright for the futures of individuals relying on these crucial retirement systems. The report reaffirms the resilience of these plans in navigating economic uncertainties while safeguarding member benefits for years to come.
