The Global Risk Institute is bringing together experts from various institutions to build a roadmap for implementing variable payment life annuities to achieve lifetime income for retirees in response to growing concerns of outliving retirement savings.
Canadians are living longer, but with this longevity, they’re also watching their workplace pension coverage decline, noted a press release from the Global Risk Institute in Financial Services and the National Institute of Ageing.
In its 2019 budget, the federal government proposed amending the tax rules to encourage defined contribution pension plans to offer VPLAs. The decumulation option aims to provide older Canadians with lifetime income by pooling longevity risk.
Experts from the NIA, Ryerson University, Simon Fraser University and Eckler Ltd. are teaming up to provide a roadmap for plan sponsors and various stakeholders on implementing VPLAs, noted the release.
The project will outline practical issues Canadian stakeholders should consider as they implement VPLAs, including how to best structure these offerings. It will also explore strategic fit and choosing between the different design options, as well as examine regulatory considerations, including the types of organizations that should be allowed to offer these annuities, the portability of other types of retirement vehicles compared to VPLAs and requirements for governance and administration.
Additionally, the report will include new insights and evidence relevant to VPLAs from recent academic and industry publications, particularly in the area of tontines. It will also highlight a series of case studies of DC plan sponsors that already offer these options to members or are contemplating adding them to their offerings.