Canadian group annuity sales top $900 million in Q1 2019

Share:
  • Facebook
  • Twitter
  • Print
  • Email
  • Comment

Closeup view : Stack of coins and a clock hands © wisitporn /123RF Stock PhotosA total of $0.9 billion in group annuity sales were placed in Canada in the first quarter of 2019, roughly in line with the same period last year, when sales reached $1 billion in the first quarter of the year, according to a quarterly update from Willis Towers Watson.

In the first quarter of 2019, 20 transactions were completed, following a very active fourth quarter in 2018. The update said significant activity is expected throughout the year, with some large transactions anticipated in the second half of the year.

The update also noted the improvement in Canadians’ life expectancy over the past decades is raising awareness of the underlying risks and related increased in the expected costs of defined benefit plans’ obligations and group annuities. “However, recent studies — most significantly in the U.S. and the U.K. — suggest a slowdown in the rate of mortality improvement,” said the report. “While it is uncertain what the future will hold, life expectancy has real financial implications today for both insurers and plan sponsors.”

Willis Towers Watson’s report also shared a status update on legislative discharge across the country. While a discharge is in place in British Columbia, Ontario and Quebec, legislation is imminent in Nova Scotia and on a federal level. As well, Alberta is considering the option.

In April 2019, the federal government introduced a bill that — once it comes into force — will allow federally regulated DB plans to be discharged from liabilities covered by the purchase of buyout annuities from an insurance company.

And this year, Nova Scotia’s bill received royal assent. Once it comes into force, it will also provide a discharge of liability for an administrator that purchases buyout annuities for former pension members, retirees and other beneficiaries. However, the update noted, annuitants will preserve their entitlement to any surplus upon plan windup if it occurs within three years from the date of the annuity purchase.

This article originally appeared on CIR’s companion site, Benefitscanada.com. Read the full story here.

Add a Comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Canadian Investment Review admins. Thanks!

Transcontinental Media G.P.