Virtually non-existent 15 years ago, the market for group annuities defined benefit pension plan de-risking has grown rapidly in recent years.
Group plan insurers and actuaries consider 2013 as the wake-up call year for the pension risk transfer niche. That year, sales of group annuities for pension plan de-risking, reached $1.9 billion. Since then, this market has been growing almost every year.
At the onset of the COVID-19 pandemic in 2020, transactions exceeding $500 million ($500M) were still considered large transactions. In 2021, General Motors completed a $1.8B group annuity transaction with three insurers: iA Financial Group, Sun Life, and Blumont Annuities (formerly Brookfield Annuities), with the assistance of global consultant WTW. This transaction is intended to protect a pension plan with more than 6,000 retirees.
The automaker accomplished several things in a single transaction. It relieved its plan of longevity risk and investment matching. It saw the insurer buy out its commitments to the plan, including administration. Insiders call this type of transaction an annuity buyout, which has been the most popular kind in recent years.
The momentum continues
Sponsors are looking for new solutions to sustain their plans.
– Rohit Thomas
The boom in the group annuity market dedicated to “de-risking” plans peaked in 2024, with a record year of $11 billion in sales volume (see table below). The year 2025 will end on a more modest note, but will still go down in history. Our sources say they expect a volume of $7 billion.
“Sponsors are looking for new solutions to sustain their plans because rising interest rates make annuities attractive,” said Rohit Thomas, President and CEO of BMO Insurance, in an interview with Insurance Portal.
The insurer is the market leader, according to Thomas. He reveals that the Bank of Montreal's insurance subsidiary is expected to take the top spot in market share for group annuities for pension plan de-risking by the end of 2025.
“We have had a very strong year in 2025 over the first three quarters. We were ranked number one in Canada. Our success has been from a series of transactions throughout the year of a variety of sizes, and a variety of plans across various sectors,” said Rohit Thomas.
To strengthen its efforts in this market, it has appointed Aleem Qureshi as Managing Director, Head of Institutional Solutions. “Aleem Qureshi is leading the pension risk transfer business and reports to me.”
Our sources agree that the number of transactions has not slowed compared to 2024, but that their average size has decreased. “Although we expect a strong fourth quarter in 2024, we won't reach $11 billion this year,” said Émile Alarie, principal, pension risk transfer specialist at Mercer Canada, in an interview with Insurance Portal.
Busy end of the year
Transaction sizes and average volumes have declined.
– Émile Alarie
Alarie says he sees “a lot of activity” in the fourth quarter of 2025. He explains that following last year's record, some insurers have set capacity targets accordingly. “They can afford to bid up to the capacity they had in 2024.”
According to the LIMRA data he shared, the pension risk transfer market recorded transactions totaling $1.3 billion in the third quarter of 2025. As of September 30, 2025, the market totaled $2.9 billion in volume. “The number of transactions may have declined slightly, but not drastically. The size of transactions and their average volume have decreased,” says Alarie.
The market is expected to finish strong. “Q4 is a very busy time for pension risk transfer, and we expect quite a large volume to come to the market,” said Rohit Thomas.
Indexed annuities shine
In addition, a previously under the radar group annuity product that protects pension plans against inflation, has come into the spotlight. This is the cost-of-living indexed annuity, which is also benefiting from the favorable environment for group annuity transactions in general.
The year 2024 was a record year for indexed annuities, a market segment that generated $3.3 billion in transactions. These annuities are designed to preserve the annuitant's purchasing power in the face of rising living costs. The use of this solution has intensified in recent years.
This result dispels the myth that there is no market for indexed annuities, according to Mathieu Tessier, Vice-President, Client Relationships and Innovation, Defined Benefit Solutions, at Sun Life. “The volume of indexed annuity transactions reached $900 million in 2023. It's a niche that has been booming in recent years,” said Tessier in an interview with the Insurance Portal.
“There is a growing appetite in Canada for indexed commitments. Given that price is a very important trigger for transactions, I conclude that indexed annuities are still very competitively priced in the eyes of plan sponsors,” he added.
WTW facilitated 90% of this volume, mainly through two mega transactions totaling $1.9 billion.
– Alix Baril
Alix Baril, Director, Retirement at global consulting firm WTW, estimates that indexed annuities account for approximately 10% of the total annual volume of the Canadian group annuity market, year in and year out. He believes that the record year of $11 billion confirmed its popularity, with a volume of $3.3 billion in indexed annuities, which represents 30% of the total volume.
In email responses to the Insurance Portal, Baril said that WTW facilitated 90% of this volume, “mainly through two mega transactions totaling $1.9 billion.”
Using the usual 10% scale for 2025, he predicts that indexed annuities should generate a transaction volume of just under $1 billion in a market totaling $7 billion.
Pension plan sponsors are looking to protect themselves against inflation.
– Rohit Thomas
Rohit Thomas also notes that indexed annuities are gaining traction in recent years. “Pension plan sponsors are looking to protect themselves against inflation. So, we're seeing more annuity providers participating in this segment of the market.”
Inflation risk
Indexed annuities are seen as an alternative to real return bonds. The Canadian government stopped issuing these bonds on November 3, 2022, citing low demand for this bond, which had been available since 1991. Designed to protect investors against inflation, its principal and coupons were indexed to the consumer price index.
While inflation appears to be under control, some household expenses, such as housing and groceries, remain high. Statistics Canada reported a 2.2% increase in the consumer price index (CPI) over the 12 months ending in October 2025. The federal agency will release the November index on December 15. In 2024, the average annual CPI reached 2.4%.
Central banks are working to contain inflation through monetary policy. The Bank of Canada bases its policy on inflation as measured by the total CPI, which remained at 2.2% in November. It is currently pursuing an accommodative monetary policy, by maintaining the policy interest rate at 2.25% in a December 10 decision, following its 0.25% cut in October 29, after starting the year at 3%.
At Mercer, Émile Alarie says that indexed annuities are one of the two products his clients use most commonly in plans “exposed to inflation risk.” The second is a range of alternative investments, such as infrastructure or real estate.
