The consultation on the draft regulations concerning variable payment life pensions (VPLPs), also known as variable payment life annuities (VPLAs), ended on July 12, 2025. A VPLP provides its beneficiary with a lifetime income, which may vary over time depending on certain factors.
On May 28, 2025, the Quebec government published draft regulations in the Gazette officielle du Québec that will allow defined contribution pension plans and voluntary retirement savings plans (VRSPs) to add a VPLP fund as a retirement payout option.
Retraite-Québec explains on its website that the draft regulations amend the Regulation respecting supplemental pension plans and the Regulation respecting voluntary retirement savings plans. These amendments will allow sponsors of defined contribution plans and VRSPs to create a VPLP fund option.
Funds accumulated in a locked-in retirement account (LIRA) may also be transferred to a VPLP. Individuals who have saved funds in their employer's plan may transfer them to a VPLP if they leave their job.
Linked to life expectancy
A plan member who has chosen the VPLP fund option may transfer all or part of their savings to it at the onset of retirement. The amounts will be immediately converted into income.
This income will be based on a reference interest rate and the VPLP fund's mortality assumption. Annuity payments will be adjusted annually based on the fund's performance and the mortality assumption for all of its annuities. The assumption must be reviewed by an actuary at least every three years.
“Thus, annuities may be adjusted to reflect the net returns of the fund, the mortality experience of participants in the VPLP fund, and any changes in mortality assumptions,” summarizes the actuarial consulting firm Aon in a bulletin, published in French, entitled Québec – Projets de règlements encadrant les fonds de rentes viagères à paiements variables.
“Mortality assumptions will be subject to particular scrutiny, as any application to register or amend a pension plan that includes or aims to establish a VPLP fund must specify the mortality assumptions used to determine the amount of the annuities. These assumptions must be differentiated according to gender,” states the Aon bulletin.
Payout option welcomed
The few existing decumulation solutions in Canada fail to adequately meet the needs of older retirees.
– Angelita Graham, president of the Canadian Institute of Actuaries (CIA)
In its submission to the consultation on July 11, the Canadian Institute of Actuaries (CIA) praised the arrival of a new payout option. “The few existing decumulation solutions in Canada fail to adequately meet the needs of older retirees,” writes Angelita Graham, president of the CIA.
In its brief, the CIA estimates that approximately $1.5 trillion has been accumulated in Canada in registered retirement savings plans (RRSPs) and defined contribution plans. It adds that among Quebec plan members over the age of 55, the amount is at least $200 billion.
“These draft regulations are being published at a time when access to innovative options for converting savings into income is essential for over two million individuals over the age of 55 in Quebec,” said actuarial consulting firm Normandin Beaudry in a press release entitled Draft Regulations for the Implementation of Dynamic Pensions in Quebec. Dynamic pensions are synonymous with variable payment life annuities or variable payment life pensions.
Withdraw more, faster
A VPLP can allow you to withdraw more money than if you had chosen the minimum prescribed withdrawal each year.
– Louis-Bernard Désilets, partner at Normandin Beaudry
For its part, the Canadian Institute of Actuaries believes that pooling annuities in a fund reduces costs and speeds up withdrawals. “In addition to eliminating the risk that members will outlive their savings, this solution allows them to confidently withdraw retirement income more quickly, and in an environment where the pooling of savings will let members take advantage of competitive fees,” explains Graham.
In its press release, Normandin Beaudry also welcomes the risk pooling offered by VPLPs. “By allowing risk pooling among participants, it will provide a higher income than an approach where risks are managed on an individual basis,” the release states.
Louis-Bernard Désilets, a signatory to the press release, is a partner at Normandin Beaudry. He also writes that dynamic pensions will eliminate complex decisions regarding the decumulation of accumulated funds (in a pension plan). "More and more participants have significant amounts accumulated in investment plans. This raises the problem of deciding at retirement: how much should I withdraw from this fund?" he added in an interview with the Insurance Portal.
Désilets observes that many retirees will often be able to withdraw a larger proportion of their registered retirement income fund (RRIF) than the minimum required by the Canada Revenue Agency (CRA). He adds that people often choose to withdraw the minimum amount specified in the CRA table from their RRIF.
For example, the minimum withdrawal required by the CRA in 2025 for a 65-year-old is 4% of the total value of their RRIF at the beginning of the year. RRIF funds can come from an RRSP, a group registered pension plan, a registered pension plan, a defined benefit plan, another RRIF, or a TFSA (tax-free savings account for the purchase of a residence).
“RRIF withdrawals can be optimized with tools such as annuities. Generally speaking, a VPLP can allow you to withdraw more money than if you had chosen the minimum prescribed withdrawal each year. It's useful to have an additional tool in your arsenal for withdrawing funds during retirement,” says Louis-Bernard Désilets.
VPLPs: in Canada since 1967
In its brief, the CIA strongly urges other provinces to follow Quebec's lead by adopting regulations allowing the establishment of VPLP funds in order to standardize access across the country.
In its press release, Normandin Beaudry states that Quebec is the first province to adopt such a regulatory framework.
However, other provinces have plans that offer VPLPs, even without a regulatory framework. According to the CIA, this solution has existed since 1967 in British Columbia, in the University of British Columbia Faculty Pension Plan. This plan “has a grandfather clause in Canadian tax rules. Several hundred of the current retirees in the BC plan have opted for a VPLP,” the press release states.
Saskatchewan’s Public Employees Pension Plan has also taken the step of offering variable payment life annuities, according to an article published on the Insurance Portal on March 14, 2024. The article explains that in its 2019 budget, the Government of Canada committed to make these funds a reality. This was followed by legislative amendments to allow for their existence in 2021.
Several steps to be taken
The next step is up to the provinces, which must in turn develop their own legislation and regulations governing variable payment life annuity funds, according to the Insurance Portal article.
In Quebec, the March 12, 2024, budget speech by Quebec’s Minister of Finance kicked things off, followed by Bill 80, An Act respecting the implementation of certain provisions of the Budget Speech of 12 March 2024 and amending other provisions.
In another press release published in November 2024, Normandin Beaudry points out that the Supplemental Pension Plans Act (SPP Act) and the Voluntary Retirement Savings Plans Act (VRSP Act) were amended in the fall of 2020 to introduce the concept of dynamic pensions. Bill 80 amended these two acts “to allow defined contribution plans and VRSPs to offer this new option for the decumulation of amounts accumulated in these plans at retirement,” adds the actuarial consulting firm.
