diff --git a/activerecord/lib/active_record/connection_adapters/abstract_mysql_adapter.rb b/activerecord/lib/active_record/connection_adapters/abstract_mysql_adapter.rb
index 47e51e8020..dc953892d1 100644
--- a/activerecord/lib/active_record/connection_adapters/abstract_mysql_adapter.rb
+++ b/activerecord/lib/active_record/connection_adapters/abstract_mysql_adapter.rb
@@ -751,11 +751,6 @@ module ActiveRecord
           wait_timeout = 2147483 unless wait_timeout.is_a?(Integer)
           variables["wait_timeout"] = wait_timeout
 
-          # Set the collation of the connection character set.
-          if @config[:collation]
-            variables["collation_connection"] = @config[:collation]
-          end
-
           defaults = [":default", :default].to_set
 
           # Make MySQL reject illegal values rather than truncating or blanking them, see
@@ -775,6 +770,15 @@ module ActiveRecord
           end
           sql_mode_assignment = "@@SESSION.sql_mode = #{sql_mode}, " if sql_mode
 
+          # NAMES does not have an equals sign, see
+          # https://dev.mysql.com/doc/refman/en/set-names.html
+          # (trailing comma because variable_assignments will always have content)
+          if @config[:encoding]
+            encoding = +"NAMES #{@config[:encoding]}"
+            encoding << " COLLATE #{@config[:collation]}" if @config[:collation]
+            encoding << ", "
+          end
+
           # Gather up all of the SET variables...
           variable_assignments = variables.map do |k, v|
             if defaults.include?(v)
@@ -786,7 +790,7 @@ module ActiveRecord
           end.compact.join(", ")
 
           # ...and send them all in one query
-          execute("SET #{sql_mode_assignment} #{variable_assignments}", "SCHEMA")
+          execute("SET #{encoding} #{sql_mode_assignment} #{variable_assignments}", "SCHEMA")
         end
 
         def column_definitions(table_name) # :nodoc: