The Co-operative Superannuation Society Pension Plan is making a deal with the Co-operators Group Ltd. on a longevity insurance agreement to protect its annuity offering.
“CSS is very proud to have been providing an in-plan annuity option to our members for close to 50 years,” said Martin McInnis, executive director of CSS, in a press release. “Our agreement with Co-operators is a proactive and innovative approach that prudently protects our plan’s annuity offering against longevity risk and positions CSS to continue to meet the retirement income needs of our members well into the future.”
According to the release, the deal is just the third of its kind in Canada. The first was between the Bell Canada pension plan and Sun Life Financial in 2015. The second was between the Canadian Bank Note pension plan and the Canada Life Assurance Co. in 2016.
Under the agreement, the CSS plan, which is one of Canada’s oldest defined contribution plans, will transfer longevity risk for $660 million of liabilities to the Co-operators. The CSS will provide quarterly payments while the Co-operators will pay the actual benefits amounts to the plan on a quarterly basis. The CSS will continue to be responsible for paying monthly pension benefits to plan members.
The Co-operators negotiated the custom insurance contract with Aon, which acted as advisor to the CSS plan. Due to the size of the group in question, the parties expect the contract will operate on a non-collateralized basis.
“This agreement is a testimony to what can be achieved when there is a willingness to consider innovative solutions to improve member security,” said William da Silva, Canadian national director for retirement solutions at Aon.