With all the volatility in interest rates over the last few years, do annuities still represent good value for DB pension plan sponsors? Based on our analysis, we believe that they do – although the reasons might surprise you.

Over the past two years, annuities provided an additional average yield of 18 basis points compared to a passive bond portfolio. This means that plan sponsors who purchased annuities got longevity and investment risk protection for free – leading us to call annuities “super bonds”!

Brent Simmons shares his views in a article on LinkedIn on why the risky strategies used by DB pension plans for the past 20 years have destroyed shareholder value for many Canadian companies and are no longer appropriate in today’s economic environment.

Read the article