Sun Life takes over manufacturer’s DB pension obligationsBy The IJ Staff | November 21 2019 01:45PM
Sun Life Financial announced Nov. 21 that it will assume responsibility for pension benefits owed to nearly 1,500 Ontario and Quebec pensioners and their beneficiaries, when it closes a $293-million annuity buy-out transaction with Rayonier Advanced Materials.
An annuity buy-out is a group annuity policy which transfers all of the risks for a group of members from an employer’s balance sheet to an insurer’s balance sheet in exchange for a premium. The insurer assumes responsibility for making pension payments to the employer’s plan members with no change to the payment frequency or the amounts pensioners receive.
“This transaction highlights a growing trend in Canada,” Sun Life said in a statement. “Organizations with defined benefit pension plans are seeking better risk management solutions so they can focus on their core business.”
Following the transaction, Sun Life will begin administering pension benefits for Rayonier in early 2020. The cellulose manufacturer currently employs approximately 4,200 people. Rayonier and Sun Life say the administrative change will affect about 1,500 of Rayonier’s pensioners.