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Canadians’ pension plans have never been healthier despite the ongoing economic uncertainty and stock market volatility, according to a new report by human resources consultant Mercer (Canada) Ltd.

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The solvency ratio — the funds available to cover pension liabilities, including future payouts — for defined-benefit pension plans rose to a record level of 126 per cent at the end of June, according to the Mercer Pension Health Pulse, which tracks the median ratio of 471 plans in the public, private and not-for-profit sectors.

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“Since we’ve been doing the quarterly (pension pulse) publication, this is a high at any quarter end,” said Jared Mickall, a principal and wealth practice leader at Mercer, adding that the index’s solvency during the second quarter gyrated with the markets.

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“Equities definitely fuelled the assets, and liabilities came down a little bit because of interest rate movements going a little bit off during the quarter,” he said. “So, overarching, it’s a great story for stakeholders of defined-benefit finance.”

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Stock markets took many turns during the second quarter.

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On April 2, United States President Donald Trump unveiled his plan for reciprocal tariffs against most countries, causing stocks to swoon. The S&P 500 index fell 12 per cent and the S&P/TSX composite index dropped 11 per cent before Trump backtracked a week later.

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From the troughs of those declines, the S&P/TSX composite is up 19.5 per cent the S&P 500 is up 25 per cent.

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Mickall said record solvency levels should provide holders with an oasis of calm “in the face of all this other financial uncertainty that we’re seeing in our daily lives.”

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Defined-benefit pension plans are considered the gold standard in retirement planning because they are managed for the employee and are set up to provide a guaranteed payout once that person retires.

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In previous years, the solvency of these plans had been a worry, with their solvency levels falling to a bit less than 70 per cent in 2009, meaning there were not enough funds to cover payouts.

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As of 2023, about a quarter of paid workers covered by a registered pension plan had a defined-benefit plan, compared with seven per cent for a defined-contribution plan and five per cent for other types of plans, according to Statistics Canada data released in June.

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But there was an increase in the number of Canadians with some form of pension coverage. Membership in defined-benefit plans grew by 4.2 per cent in 2023, even though the share of such plans as a percentage of overall pension membership was flat at 68.1 per cent.

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The number of defined-contribution plans, where retirement benefits are not guaranteed and rely on the size of the investment pot at a member’s retirement, grew by 4.1 per cent compared with 2022. Most members with this type of plan, which hasn’t been around for as long as defined-benefit pensions, work in the private sector.