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March 2015

Longevity insurance: a first contract in Canada

As Normandin Beaudry informed you in September 2014, longevity risk management will lead to new risk mitigation strategies hitting the Canadian market, including longevity insurance. The March 3 announcement of the $5 billion longevity insurance agreement reached between BCE and Sun Life Financial confirms this trend.

Longevity insurance is generally reserved for pension funds of more than $500 million. For smaller pension funds, annuity purchases continue to be the preferred solution for mitigating longevity risk as well as financial risks (interest rate risk, equity market risk and inflation risk). In fact, 2014 was a record year in Canada for group annuity purchases with a sales volume of close to $2.5 billion.

The Normandin Beaudry consultants continue to work on new risk mitigation strategies for their clients and are available to answer any questions on this subject.

Please feel free to contact us for additional information.