Brookfield Asset Management has launched a wholly-owned subsidiary called Brookfield Annuity Co., the first company in Canada to specialize in providing group annuity solutions for de-risking defined benefit pension plans.
Compared to global annuity markets, particularly Britain, Canada has been a bit slower to follow this trend, according to Paul Forestell, president and chief executive officer of the new company. “But there are a number of factors that have made everyone agree that Canada is likely the next major country where this is going to take off,” he says.
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“Many DB plans are now closed to new entrants and have been for some time, therefore less employees that are currently working participate in the plan. In addition, rising interest rates have improved the funded position of the plans to the point where risk transfer is a more viable option.”
Brookfield Annuity Co. will offer group annuity buyouts, buy-ins and longevity insurance, though Forestell notes the longevity insurance market has been very slow and isn’t likely to grow significantly, especially compared to other global markets.
“Given the size of plans in Canada, it’s not as clear to me it will ever take off the same way it has in the U.K.,” he says. “But buy-ins, in particular, have really started to ramp up in Canada over the last couple of years. That will likely lead the way, followed by buyouts.”
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