Canadian defined benefit pension plans continue to show strength in Q2, with the majority well above full funding levels despite economic headwinds, according to Mercer  

TORONTO, July 2, 2026 – Mercer, a business of Marsh and a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people, today shares that Canadian defined benefit (DB) pension plans generally continue to show impressive gains, capitalizing on strong investment returns to improve their solvency position in the second quarter of 2026.

The Mercer Pension Health Pulse (MPHP), a measure that tracks the median solvency ratio of the DB pension plans in Mercer’s pension database, shows the median solvency ratio was 128% as of June 30, 2026. The solvency ratio is one measure of a pension plan's financial health. In the second quarter of 2026, the median solvency financial position of Canadian defined benefit pension plans increased by 5%, primarily driven by investment returns in the quarter. Offsetting the impact of strong investment returns were slight decreases in interest rates, which resulted in an increase in the value of pension promises (actuarial liabilities) and the use of contribution holidays by plan sponsors.

At the end of the second quarter, 65% of plans had a solvency ratio of 120% or more; 89% had a solvency ratio of 100% or more, while 11% of plans are estimated to be in a deficit position.

Strong solvency financial positions should alleviate DB pension plan members’ concerns by providing confidence that plans are well prepared to face headwinds. Further, these strong financial positions can help organizations navigate the current complex operating environment through various actions including contribution holidays and early retirement programs. Employers should still continue to exercise caution when setting their surplus strategies since geopolitical risks remain, and the financial health of some pension plans may come under pressure during periods of crisis.

During the second consecutive quarter, the Bank of Canada¹ held its overnight rate steady at 2.25%. Forecasts on direction of interest rates are not clear. Inflation in May has been higher than the Bank of Canada’s target, which could cause interest rates to rise. Meanwhile in March, the Canadian economy had entered a technical recession, however GDP growth rebounded in April, growing 0.5% in the month. Arbitrating between supporting the economy and keeping a lid on inflation will be a challenge for the Bank of Canada in the coming months.

¹ Bank of Canada, 2026

Pension Health Pulse tracks the median ratio of solvency assets to solvency liabilities of the pension plans in the Mercer pension database, which includes financial, demographic and other information of Mercer’s pension plan clients in Canada. The database contains information on 435 pension plans across Canada, in every industry, across the public, private and not-for-profit sectors. The information for each pension plan in the database is updated every time a new actuarial funding valuation is performed for the plan.

The financial position of each plan is projected from its most recent valuation date, reflecting the estimated accrual of benefits by active members, estimated payments of benefits to pensioners and beneficiaries, an allowance for interest, an estimate of the impact of interest rate changes, estimates of employer and employee contributions (where applicable), and expected investment returns based on the individual plan’s target investment mix, where the target mix for each plan is assumed to be unchanged during the projection period. The investment returns used in the projections are based on index returns of the asset classes specified as (or closely matching) the target asset classes of the individual plans.

Mercer is a business of Marsh (NYSE: MRSH), a global leader in risk, reinsurance and capital, people and investments, and management consulting, advising clients in 130 countries. With annual revenue of $27 billion and more than 95,000 colleagues, Marsh helps build the confidence to thrive through the power of perspective. For more information about Mercer, visit mercer.com, or follow us on LinkedIn.

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