Some $2.5 billion of group annuity purchases were placed during the first three quarters of 2017, in line with the total annual sales for the past few years, according to Willis Towers Watson’s latest report on the Canadian annuity market.

The vast majority of year-to-date annuity transactions were for ongoing pension plans, which demonstrates the continued trend towards opportunistic purchases, noted the report. It also expects this increased activity will continue for the remainder of 2017.

Read: Group annuity market could reach $10B over next three years: report

The report provides an overview of the Quebec government’s draft regulations, announced in July 2017, which will prescribe for the first time the contents of an annuity purchase policy. In addition, it will allow the complete discharge of plan sponsor responsibility in respect of purchased annuitants, also known as the elimination of boomerang risk.

“For plan sponsors who wish to de-risk their pension plans through annuities, the removal of boomerang risk for Quebec members is a welcome change as it removes the administrative burden and costs related to purchased annuitants, while eliminating any insurer counterparty risk,” states the report. 

“Ontario is also moving to provide a discharge on the purchase of a buyout annuity. Changes to address this were included in Bill 177, which was introduced on Nov. 13, 2017.”

Read: New DB pension proposals in Quebec, Ontario tackle annuity purchases

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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