A new whitepaper from TELUS Health is a departure from the typical reporting on the role which annuities play in managing pension risk. The company’s annual retrospective on the pension risk transfer market says annuities remain an important tool, but they say Canadian pension plans are also increasingly focused on managing their risk actively.
“Risk transfer is not the only solution or end objective for pension plans. Many plan sponsors choose to continue running their plans and managing their risk actively,” the Pension Risk Insights and Outlook 2025 Year-end review from TELUS Health states. “Interim measures to reduce risk can be as deliberate and effective a strategy as executing an annuity purchase transaction. This expanded outlook reflects that philosophy.”
Surplus is not a permanent state
They say many Canadian plans are sitting on meaningful surplus positions, but they warn that surplus is not a permanent state. Relying on the returns plans enjoyed in 2024 and 2025 is not a risk management strategy, they add. “Plan sponsors who act strategically now, with robust governance and clear objectives will be better positioned regardless of what 2026 brings.”
The report goes on to say the Canadian pension risk transfer market ended 2025 with $6.8-billion in transacted annuities. The decline of total volumes from 2024 is a result of fewer jumbo transactions, those over $500-million, while the number of deals remained steady during the year. One reinsurer entered the Canadian market in 2025. Overall, they say pricing remained competitive.
According to Sun Life, which put out its own look back at the pension risk transfer market in 2025, 115 plan sponsors purchased group annuities during the year: 25 had previously purchased group annuities in the past, while the rest were first time buyers. Sun Life notes that a few organizations have passed the $1-billion mark in a single transaction over the years, but add that many instead take a phased approach, with some plans making as many as 14 separate transactions to secure their liabilities.
Jumbo deals scarcer this year
“With jumbo deals scarcer this year, insurers adapted to compete across a broader spectrum of transaction sizes and complexities. While insurers remained selective about resource allocation, they showed flexibility in consideration of deal types,” TELUS’ researchers observe. “Primary success was achieved by plans with engaged decision makers and transaction readiness, giving insurers confidence to commit resources.”
They add that larger plans remained on the sidelines despite favourable pricing and active insurer interest. “Annuities remain important but they’re part of a broader toolkit,” the report states. It goes on to advocate for the use of targeted annuity purchases for specific risks. “Innovative solutions are emerging, such as longevity exchanges,” they write, adding that these solutions and others like them are increasingly also available to smaller plans, as well. “Similar targeted approaches for other risks allow plan sponsors to customize risk management strategies based on their specific risk budgets and objectives.”
