After yet another record year in 2024, the Canadian pension risk transfer market slowed during the first half of 2025.
According to a Sun Life article published on July 28, 2025, entitled Beyond volatility: smart moves for DB plans in uncertain times, the volume of group annuity transactions involving defined benefit (DB) plan sponsors reached $1.5 billion as of June 30, 2025, compared with $3.7 billion over the same period in 2024 — a drop of nearly 60 per cent.
Group annuity transactions allow DB plan sponsors to transfer risks weighing on their pension funds — including interest rate, credit, market, and longevity risk — to insurers.
In its article, Sun Life attributes the market slowdown in the first half of the year to factors that have captured plan sponsors’ attention. “The first six months of 2025 have been a roller coaster of tariff uncertainty, geopolitical conflict and market volatility. It’s no wonder that pension risk transfer (PRT) took a backseat as plan sponsors focused on their core businesses,” the article states.
We don’t expect a record year this year.
– Mathieu Tessier
This sharp drop in transaction volume could mark the end of a near-uninterrupted streak of record years over the past decade. The market had last slowed significantly during the COVID-19 pandemic in 2020, only to surge again afterward (see chart → Evolution of Group Annuity Sales for DB Pension Risk Transfers in Canada).
In a report entitled Overview of the 2024 Canadian pension risk transfer market, Sun Life notes that the Canadian pension risk transfer market exceeded $11 billion in 2024 — more than a 40 per cent increase over 2023.
“We don’t expect a record year this year,” says Mathieu Tessier, Vice-President, Client Relationships and Innovation, Defined Benefit Solutions, at Sun Life, in an interview with Insurance Portal. Instead, he anticipates transaction volumes this year will land somewhere in the $8 to $10 billion range.
Tessier says he understands why the current climate might cause some plan sponsors to hesitate. “For a sponsor deeply involved in solving issues related to its core business, de-risking the pension plan may become a secondary priority,” he adds.
Long-term trend remains strong
Plan sponsors haven’t decided to stop buying annuities. The long-term trend is still intact
– Marco Dickner
According to our sources, the slowdown in group annuity transactions is unlikely to disrupt the long-term upward trend. “There’s no hidden danger here,” says Marco Dickner, Leader, Retirement Risk Management, Canada, at consulting firm WTW, in an interview with Insurance Portal.
“Plan sponsors haven’t decided to stop buying annuities. The long-term trend of annuity purchasing is still intact, both in the U.S. and Canada,” he says.
“That long-term trend accounted for some 130 to 140 transactions in 2024,” Dickner notes. “We expect a similar number of transactions this year. Last year, we had more jumbo transactions, which are fewer this year,” he explains regarding the slowdown observed as of June 30.
In its article Group Annuity & Risk Market Pulse – 2024 Annual Review, WTW attributes the high transaction volume in 2024 in part to the prevalence of jumbo deals — defined as transactions worth more than $500-million.
One such deal was completed by IBM Canada Limited in October 2024. It involved a buy-out group annuity transaction worth $1.5 billion, covering 6,000 members and beneficiaries. The annuities were underwritten by Blumont Annuity Company (formerly Brookfield Annuity Company) and RBC Insurance.
In a buy-out transaction, the insurer becomes the plan administrator and takes on responsibility for paying retirees, along with associated risks.
In the IBM transaction, Blumont and RBC Insurance are responsible for 75 per cent and 25 per cent of the annuity payments, respectively. RBC Insurance has served as lead administrator and has been paying the annuities since May 1, 2025.
In their WTW article, Dickner and Benoît Labrosse, Strategist, Retirement Risk Management, Canada, at WTW, say they expect insurer capacity to continue growing to meet demand. “In fact, multiple reinsurers are interested in participating in the Canadian market, which will further increase supply as necessary,” they write.
They estimate that the Canadian market is now capable of absorbing up to $4 billion in transactions in a single day.
In the interview, Dickner adds that there were four jumbo deals in 2024. “It’s a bit random,” he says, noting that it’s better to assess the market using a three-year moving average.
For its part, Sun Life highlights a 2024 annuity transaction worth $923-million by Ford Canada. Three insurers participated: RBC Insurance, Sun Life, and Desjardins Insurance underwrote a buy-out group annuity deal for members of a Ford Canada pension plan. WTW acted as advisor on the transaction.
Mathieu Tessier notes that while the transaction was made public in 2024, it was actually completed in 2023. “These jumbo deals take months, if not quarters, to come together. Sometimes, circumstances push them past the December 31 cut-off, turning one year into a quiet one and the next into a booming year,” he explains.
The Sun Life report reveals that there were three transactions over $800-million in 2024, representing 34 per cent of the total $11 billion volume.
An essential, well-priced solution
Consulting firm Normandin Beaudry regularly sees the pullback effect in its client discussions, says Philippe Rickli, its Principal, Pension and Savings, in an interview with Insurance Portal. “At first, it’s surprising, because we had almost continuous growth — except during the pandemic in 2020 and a slight slowdown in 2023,” Rickli acknowledges.
Rickli notes that some clients were unsettled by stock market volatility earlier in the year. Selling part of their equity portfolio to finance group annuity purchases is one of the options available to plan sponsors. “In Q1 2025, some clients decided not to sell their equities after suffering major losses.”
He explains that sponsors may first want to recover from those losses, then match equities with bonds to rebalance risk — before turning to the annuity market.
Insured annuities are a vital risk management tool for pension plans
– Philippe Rickli
Rickli notes that in the short term, some public sector clients — for example, in the municipal sector in Quebec — may be more inclined to complete annuity transactions. “In the context of tariffs, these pension plans are sometimes less affected by the economic realities forcing others to focus on operational issues. They may have time to consider these deals,” he says.
Overall, group annuities remain an attractive financial product, he believes. “Insured annuities are a vital risk management tool for pension plans. They remain a strong and accessible solution at a good price,” he adds, noting that current returns are approaching 5 per cent.
Sun Life’s article on the 2025 slowdown highlights this advantage. As of March 31, 2025, annuity yields stood at 4.59 per cent, compared to 3.41 per cent for bond portfolios, once estimated fees of 1 per cent were deducted.
Bond yields were based on a blend of the FTSE Canada All Corporate Bond Index and the FTSE Canada Long-Term Corporate Bond Index, to match the duration used in approximating annuity pricing, as defined by the Canadian Institute of Actuaries (CIA).
Favourable market conditions in 2025
Tessier says he’s heard that some plan sponsors facing time constraints will proceed with their transactions as planned in 2025. “The queue is shorter. There’s room for agile, well-funded sponsors to move forward. We — insurers and consultants — have some risk appetite and bandwidth to help solve problems,” he says.
Rickli agrees. “Interest rates have increased significantly since the COVID-19 pandemic. Pension plan financial positions have improved since 2021–2022,” he notes. This has allowed plans to shift favourably into bonds.
“A plan can match durations and achieve similar behaviour between assets and liabilities — that already gets you partway to financial immunization. You’re thinking long term, selling equities to buy a bond portfolio, which will in turn pay a premium to the insurer to secure the pension fund,” Rickli illustrates.
A concentrated market
Three advisory firms captured 81 per cent of the group annuity market for DB risk transfers in 2024, according to Sun Life’s report data.
WTW maintained its lead with a 49 per cent share of group annuity premiums sold in 2024. Aon followed with 18 per cent, and Mercer with 14 per cent.
Other players included Telus Health, with a 9 per cent share, and Normandin Beaudry, with 3 per cent. The remaining 7 per cent was split among several other firms.
