This summer, the Canadian Institute of Actuaries released new pension mortality tables. The tables revealed longer life expectancies than were previously provided by commonly used tables. Some of the industry reaction has focused on the longevity risk faced by DB pension plans.
New figures confirm that life expectancy in Canada has increased—a trend that, in the eyes of experts, poses a threat for the sponsors of both DB and DC plans and calls for new measures such as transferring risks to insurance companies and providing education for plan members.
Today, most plan sponsors’ contributions to their DB plans are being driven by the results of their pension plans’ solvency valuations.
$150 million policy pushes risk to insurer.
Despite tastes for beaver tails and poutine, Canadians are living longer than ever before. And if you’re an employer with a DB pension plan, it probably means that you’ll be paying pensions to your retirees for longer than you expect.
The thinking for plan sponsors over the last decade has been to reduce risk, reduce liabilities, get out of DB and move to a DC pension model. But a pure DC plan isn’t the answer to the overarching pension problem—and neither is DB, argued Yvan Legris, global CEO, consulting, with Aon Hewitt, at a recent Toronto Board of Trade event.
At the Colleges of Applied Arts and Technology (CAAT) Pension Plan (No. 29), those charged with overseeing the retirement savings of nearly 34,000 plan members from participating Ontario colleges aim to respond to changes before they happen. And they try to be as transparent as possible with members when changes to the plan are deemed necessary.
UK's Akzo Nobel signs a £1.4-billion longevity insurance contract with Swiss Re.
Governments around the globe will need to gradually increase their retirement ages in order to keep their pension systems sustainable, according to a new report from the Organisation for Economic Co-operation and Development (OECD).
There's no question longevity risk has become increasingly front of mind for pension plans. But it looks like our neighbours across the pond may have a leg up in hedging against the risk.