Coalition of experts creating roadmap for implementing VPLAs

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Three gold nest eggs gleam against black background © Florence And Joseph McGinn /123RF Stock photosA group of experts from Ryerson University’s National Institute on Ageing, Simon Fraser University and Eckler Ltd. are teaming up to build a roadmap for implementing variable payment life annuities.

Canadians are living longer, but with this longevity, they’re also watching their workplace pension coverage decline, noted a press release from the Global Risk Institute in Financial Services and the National Institute of Ageing.

In the 2019 federal budget, the government proposed amending the tax rules to encourage defined contribution pension plans to offer VPLAs. The decumulation option aims to provide older Canadians with lifetime income by pooling longevity risk.

The group of experts will produce research outlining practical issues Canadian stakeholders should consider as they implement VPLAs, including how to best structure these offerings. It will also explore strategic fit and choosing between the different design options, as well as examine regulatory considerations, including the types of organizations that should be allowed to offer these annuities, the portability of other types of retirement vehicles compared to VPLAs and requirements for governance and administration.

Additionally, the report will include new insights and evidence relevant to VPLAs from recent academic and industry publications, particularly in the area of tontines. It will also highlight a series of case studies of DC plan sponsors that already offer these options to members or are contemplating adding them to their offerings.

The researchers expect to release a white paper of their findings in early 2021, which will be published by the GRI’s national pension hub in collaboration with the NIA.

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