Global advisory firm WTW announced Feb. 21 that RBC Insurance, Sun Life and Desjardins have coordinated with WTW to complete arrangements for a group annuity buy-out transaction worth $923-million, for members of the Ford of Canada Retirement Pension Plan Number 3 who retired on or before June 1, 2021.
Under an annuity buy-out plan sponsors divest both the requirement to make payments to their retirees, along with the plan’s administration, in exchange for an annuity premium payment made by sponsors to insurers who assume responsibility for both.
Risk transfer opportunity
“WTW estimates that up to 88 per cent of Canadian private sector defined benefit pension plan liabilities remain available to be secured by annuity transactions. Plan sponsors are expected to continue to take advantage of this risk transfer opportunity as many Canadian pension plans are well-funded and rising interest rates have improved annuity pricing,” they write.
Brent Simmons, head of defined benefit solutions with Sun Life adds: “The Ford transaction demonstrates the ability of insurers in the Canadian annuity marketplace to collaborate on insurance solutions that provide increased benefit security and peace of mind for annuitants.”
Beyond saying that RBC Insurance was the lead insurer in the $923-million deal, terms of the transaction were not disclosed.
Related:
Sun Life discusses record-breaking year in the pension risk transfer market
