The Canadian group annuity market has grown exponentially over the last 15 years.
Back in 2008, only terminating DB pensions plans used group annuities. It was rare for consultants to talk to plan sponsors about how annuities could help manage pension risk. At that time, pension risk management often meant changing a pension plan’s investment portfolio from 60% equities to 55% equities. A rather limited change compared to today’s many options! The only solution to transfer pension liabilities from a plan sponsor’s balance sheet to an insurer’s was for retirees in the form of a buy-out annuity policy.
Today, the landscape looks very different. The popularity of group annuities has grown as their benefits have become better understood. Pension risk management is now mainstream. In fact, in a recent report by WTW, 87% of annuity purchases were for ongoing plans1. Consulting firms now have specialized annuity teams to work with DB plan sponsors and insurers. This enabled the development of customized solutions for pension plans of all sizes and characteristics. Pension risk transfer solutions now include buy-out and buy-in policies for active, deferred, and retired plan members.
A quick comparison between 2008 and 2022 shows the evolution of the Canadian group annuity market.