The variable payment life annuity (VPLA) is a relatively new concept in Canada. Introduced in the 2019 federal budget, VPLAs pool both longevity and investment risk for plan members and provide lifetime income. As the name indicates, payments are variable, depending on both the mortality experience and investment returns in the pool. Despite this variability, the payments never stop during the client’s lifetime.
The solution reportedly provides higher income than the minimum amounts that individuals often take from their registered retirement income funds (RRIFs), out of fear that their money won’t last in retirement.
“Because the risks are pooled and because it’s a collective solution, that also gives you access to better fees. You get economies of scale, because it’s a collective solution. That’s not to be overlooked,” says Louis‑Bernard Désilets, partner, pension with Normandin Beaudry, which advises private sector pension plans including those for municipalities and universities.
Amendments to the Income Tax Act in 2021 gave the authority to regulate the new decumulation option to the provinces and territories. Now provinces and territories must each develop their own legislation and regulations to govern VPLAs (as they’re known federally – different provinces use different names to describe the decumulation option).
In January this year, Quebec became the first province to allow defined contribution (DC) pension plans and voluntary retirement savings plans (VRSPs) in the province to offer dynamic pension decumulation options to their plan members.
Ontario is also in the running. That province introduced variable life benefits (VLBs) as a new retirement income option for DC plan members, beginning in January 2027. The province says it will consult on new proposed regulations later this year.
The rest of the provinces, however, remain at very different stages.
What’s stopping provinces?
Across the country, different jurisdictions are reportedly studying the Quebec example as provinces craft their own regulations. Désilets says in some jurisdictions, regulatory capacity can be a real constraint. “Designing rules for a new decumulation vehicle requires resources and technical expertise. Some jurisdictions may already be engaged in pension reform initiatives, leaving limited room for additional projects.”
Political context, he says, can also slow the progression of policy work as elections occur and governments change. “Some provinces may also have adopted a wait and see approach. They prefer to observe how early adopters proceed before finalising their own framework.” He adds the governments may also be questioning whether enough plans would adopt the VPLA solution to justify the effort required to develop a full regulatory framework.
“That doesn’t mean, however, that they will not eventually build on the work done by other provinces as their regulations are released and as VPLAs come to market. Interest is likely to increase for many jurisdictions. It’s a matter of time, rather than reluctance.”
Désilets also says it’s worth mentioning that most provinces outside of Quebec have adopted pooled registered pension plan (PRPP) legislation which largely mirrors federal PRPP legislation. Jurisdictions are also waiting for federal PRPP regulations to be amended for VPLAs. “They will likely incorporate similar provisions into their own legislation in the interest of harmonizing the rules.
About rulemaking
That rulemaking, meanwhile, he says can be described as rigorous. In Quebec’s case and across the country, the work was and is being completed in close collaboration with Canadian Association of Pension Supervisory Authorities (CAPSA).
“There is a broad national alignment around the shared goal of helping people across the country manage the decumulation of their retirement savings,” Désilets says. “Because VPLAs involve pooling longevity and investment risks among members, regulators want to ensure that the governance and communication structures are solid.”
He adds that each province wants to take the time needed to build a regulatory framework that protects members’ interests while giving plan sponsors enough flexibility to operate effectively. “Developing such a framework takes effort. Regulators want to get it right from the outset and avoid having to go back to the drawing board because of gaps or oversights.”
Strong incentive to act
Désilets says the momentum behind the regulation of VPLAs is building because the need is significant: 13 million Canadians over the age of 55 hold more than $1-trillion in registered retirement savings plans (RRSPs) and DC plans. “Yet the available options to convert these savings into lifetime income remains limited. VPLAs are a meaningful new solution,” he says. “In fact, within the next two years, we could very well imagine that there will be three VPLA funds in Canada to funnel the billions of dollars of savings belonging to people looking for a decumulation solution: one in Quebec, one in the Maritimes and one in the Prairies.”
He adds that every province has an interest and strong incentive to consider the option given the need to provide retirees with dependable retirement income. “This need is too important to overlook.”
For the provinces too, unlocking assets that would otherwise remain untapped in RRIFs across the country will translate into greater tax revenues which could, in turn, be used to fund the growing range of services required by an aging population.
“Adoption is expected to grow over time as individuals better understand the value of lifetime income,” Désilets adds.
Would-be providers interested, but waiting
Those companies that would provide such an investment structure are no doubt paying attention to the developments surrounding VPLAs. That said, he says their enthusiasm may depend on how quickly provinces move. “Many see VPLAs as a promising addition to their decumulation toolbox, but scale matters. Without broad regulatory adoption, it may be difficult to justify major product development or system changes,” Désilets says. “Providers are also watching for clarity. They want consistent rules across provinces.”
He says likely providers will be those already offering PRPP and VRSP solutions. “Overall, I would say that the interest is there. Providers recognize the value of VPLAs but some may be waiting for signs of broader legislative momentum before investing heavily.”
To help those interested in understanding where each of the provinces stand regarding their development of legislation and regulations to govern VPLAs, the Insurance Portal has approached CAPSA members – regulators and ministries of finance – to find out more.
Alberta
In Alberta, the Ministry of Treasury Board and Finance says the province is currently reviewing legislation introduced in other jurisdictions related to VPLAs. It is also engaging stakeholders to determine the best path forward.
British Columbia
Notably, British Columbia is home to one of the few VPLAs already in existence. (It was created for some University of British Columbia faculty prior to tax policy changes that initially restricted VPLAs.) Known as variable life benefits (VLBs) in the province, British Columbia amended its Pension Benefits Standards Act to include provisions that would permit such benefits.
“However, while the legislative framework is in place, the amendments are not yet in force, as they require supporting regulations,” say representatives with the BC Financial Services Authority.
“At this time, regulations governing variable life benefits in British Columbia have not yet been drafted. There is currently no timeline for when the legislative provisions related to variable life benefits may come into force.”
Manitoba
In Manitoba, the Pension Benefits Act and regulations do not currently contemplate VPLAs. That said, the Office of the Superintendent – Pension Commission, says the act is currently under review, in accordance with sections which require it to be reviewed every five years. “Any information forthcoming will be shared with stakeholders,” they write. “At this time, our office has no information to share.”
New Brunswick
Currently, the New Brunswick Pension Benefits Act does not allow this form of benefit, and therefore, does not yet have a specific name for it. “The Financial and Consumer Services Commission of New Brunswick is currently reviewing various decumulation options (such as VPLAs) as part of a policy development project. New Brunswick is, therefore, at a very early stage (policy research) for any legislative or regulatory change in this regard,” they write.
Newfoundland and Labrador
Not yet recognized in legislation in Newfoundland and Labrador, VPLAs in the province are not formally being investigated, as the province continues to assess best practices. “Any future legislation must be designed to meet the needs of people and businesses in Newfoundland and Labrador, while supporting consistency and alignment across Canada,” they write.
Nova Scotia
This province’s Superintendent of Pensions says Nova Scotia has not yet begun developing either legislation or regulations concerning VPLAs.
Ontario
In Ontario, an announcement about VLBs was made in the 2026 Ontario budget.
“In Bill 97, Plan to Protect Ontario Act (Budget Measures), 2026 (the 2026 Ontario Budget), the government proposed amendments to the Pension Benefits Act that would enable certain pension plans — defined contribution plans or plans with additional voluntary contributions — to offer variable life benefits,” say representatives from the Financial Services Regulatory Authority of Ontario (FSRA). “Enabling regulations are required before a pension plan could offer a variable life benefit in Ontario. Proposed regulations would be informed by stakeholder consultations that are planned for later this year. The government is targeting January 1, 2027, as the date when eligible plans could begin to offer variable life benefits.”
Prince Edward Island
Canada’s island province is a CAPSA observer, not an official member. Although the province has pension legislation, supervision is still under development. The province has not signed on to the CAPSA Multi-Lateral Agreement, according to CAPSA representatives.
In the province, representatives from the Prince Edward Island Department of Justice and Public Safety say the department currently does not have direction to commence a legislative policy project to introduce pension benefit legislation.
Quebec
This province would provide no update, referring the Insurance Portal instead back to its own reporting on the subject.
Saskatchewan
Finally, the last province to enable legislation related to VPLAs, Saskatchewan’s representatives point out that Bill 108, The Pension Benefits Amendment Act, received Royal Assent back in May 2023.
“Bill 108 allows for the development of regulations with respect to employers amending their plan to be able to offer VPLAs to their members,” say representatives from the Financial and Consumer Affairs Authority. “The Financial and Consumer Affairs Authority are working on the regulations to accompany the bill.”
