Focus 2026 recap: practical takeaways for DB plan sponsors

Session 1: A rare moment of strength – smart ways to protect DB plan surplus

According to WTW, after almost 20 years of deficits, over two-thirds of Canadian DB pension plans now have accessible surplus. Marco Dickner from WTW and Jonathan Morin from our DB Solutions team discussed why it’s a great opportunity for plan sponsors to reassess their pension risk management strategies. 

Rebalancing risk is essential

The current surplus in DB plans reflects the risks that sponsors have taken in recent years, which created favourable outcomes. But maintaining the same risk level may not be the best path forward. With such strong surplus positions, plans can now afford to de-risk and crystallize gains. 

Unlocking trapped surplus through group annuities

For many plans, surplus is often “trapped.” For example, in Ontario, plans typically need to maintain a 5% solvency buffer before they can access contribution holidays. Reducing plan size through a PRT transaction can release surplus and improve cash flows, especially for larger plans. 

Certainty and trade-offs in de-risking

Annuity market pricing can differ from theoretical estimates. And while annuities are irreversible, insurer pricing relative to bond yields means the move may actually increase expected surplus. Dickner shared an example where a major transaction moved funded status from 101% to 110% after purchase, while materially reducing both longevity and investment risk.  

Bottom line for plan sponsors

Changes in a plan’s funded status can significantly impact strategic discussions. Consider if a PRT transaction could fit into your overall comprehensive pension strategy to reduce risk, boost surplus certainty or free up surplus.  

Session 2: Innovations in pension de-risking – a PRT case study

Kelly Zhan and Kieran Gillett from DB Solutions introduced Project Beacon, a $300M+ group annuity transaction, to show how PRT innovation has progressed significantly, making possible to transact in increasingly unique and complex situations.  

Major moves forward in de-risking

• Complex plan provisions: Multiple benefit structures, varied normal retirement ages and different pension forms can now be fully modeled and transferred without compromise. 
• Inflation-protected benefits: Market volumes for CPI-linked annuities reached $3.3B in 2024 and $1.3B in 2025, demonstrating insurers can competitively price inflation risk at scale – including 100% uncapped CPI or capped provisions. 
• Deferred member populations: Large deferred groups are no longer de-risking obstacles. Moving deferred liabilities earlier supports balance sheet stability and cost certainty while reducing long-term administrative burden. 
• Active member inclusion: Risk transfer can now encompass active members alongside retirees and deferred members, enabling holistic solutions rather than piecemeal approaches. 
• Member portability: Portability options (I.e., lump sum alternatives) can coexist with PRT transactions through competitive, experience-based pricing that avoids overly conservative assumptions. 

Bottom line for plan sponsors

De-risking is no longer limited to "plain vanilla" transactions. The market now offers an execution-ready toolkit of proven components that can be customized to unique plan challenges – delivering both flexibility and execution confidence without first-time risk exposure. 

Session 3: The Halifax Port ILA/HEA Pension Plan – navigating PRT for the best member outcomes

Blair Richards from The Halifax Port ILA/HEA Pension Plan spoke with Dhvani Desai from DB Solutions about a pivotal challenge faced by the DB plan: after successfully managing ad hoc pension increases for 35 years, regulatory constraints eliminated their ability to continue on their traditional path. This development, coupled with a strong funded position, prompted them to explore PRT solutions in 2025. 

 The plan, a Specified Multi-Employer Plan (SMEP), had a primary objective to secure a guaranteed 4% fixed cost-of-living allowance for retirees. Through meticulous preparation and collaboration, they successfully achieved this target with the 2025 PRT transaction. 

At first, Richards was not a fan of group annuities but after systematically evaluating 12 potential options, it became clear the risk/return trade-off of a PRT transaction was the best solution for the plan. 

The innovation: solving for complexity

Émile Alarie, from the plan’s consulting firm Mercer, shared the innovative approach that sets this transaction apart: a deferred premium structure to handle illiquid assets. The plan held a portion of assets in a fund that imposed redemption restrictions, presenting a significant liquidity challenge. Instead of delaying the transaction, Mercer and Sun Life devised a two-part premium arrangement: 

1. a cash premium, paid upfront in line with traditional practice, and 
2. a deferred premium, scheduled as phased repayments that matched the fund's redemption timeline.  

This solution allows plan sponsors facing liquidity challenges to de-risk without selling assets under pressure. It paves the way for greater flexibility and execution confidence in complex pension transactions. 

Bottom line for plan sponsors

The Halifax Port ILA/HEA Pension Plan’s story shows that DB plan sponsors can secure positive member outcomes despite regulatory and liquidity challenges, without compromising on flexibility and security.  

Final thoughts

PRT transactions are flexible solutions that, when used strategically, can help sponsors protect gains, manage risk, and secure member pension benefits. Success comes from proactive planning, a willingness to embrace innovation and close alignment with overall plan objectives.  

It may be time to move your DB plan from favourable conditions to lasting outcomes! 

Watch the full event recording