Sun Life Financial now offers longevity insurance, designed to lessen longevity risk for companies that offer DB pension plans to their employees. The solution—a first in Canada—provides plan sponsors with protection from extra pension costs that arise if their plan members live longer than expected—something that is a growing phenomenon.

“From a company perspective, longevity insurance reduces cash and earnings volatility, allowing management to focus its time and attention on running its core business,” says Brent Simmons, senior managing director, defined benefit solutions, group retirement services, Sun Life Financial Canada. “From a public policy and pensioner perspective, risk is transferred to a highly regulated insurance company, so plan members receive additional protection for their pensions.”

Simmons says that many people can expect 30 years or more in retirement. And with continuous advances in medicine and increased focus on healthier lifestyles, predicting longevity becomes even more challenging for DB plan sponsors.

“A miscalculation of longevity risk by a plan sponsor can be costly, resulting in higher pension payout levels than what a company or fund originally planned,” says Simmons.

Sun Life’s longevity insurance is issued by Sun Life Assurance Company of Canada.

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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