Rayonier Advanced Materials is transferring a portion of its Canadian defined benefit plan obligations with a $293-million annuity buyout.

Through the transaction, Sun Life will take over the responsibility for pension benefits owed to nearly 1,500 Ontario and Quebec pensioners and beneficiaries. The plan members include former employees of forestry company Tembec, which was acquired by the global manufacturer in 2017. Sun Life will begin administering pension benefits for these plan members in early 2020, with members’ pension benefits remaining unchanged.

Read: Buy-ins and boomerangs: A look at the trends in Canada’s annuity market

“With this transaction, we are proud to ensure the financial security of many former Tembec employees, while strengthening the balance sheet and solidifying RYAM’s ability to help support current and future retirees in their retirement,” said Jay Posze, the company’s senior vice-president of human resources, in a press release.

Sun Life noted the transaction highlights a growing trend in Canada, as DB plan sponsors seek better risk management solutions so they can focus on their core business while ensuring the security of plan members’ pension benefits.

“We are delighted to be working with RYAM and their consultant Mercer, to help right-size RYAM’s pension plans and meet their business objectives, while protecting their pensioners’ benefits,” said Brent Simmons, senior managing director and head of DB solutions at Sun Life. “Transactions of this size are complex and require all parties to be organized and nimble. Both RYAM and Mercer were prepared and took a planful approach to help execute this deal.”

Read: How Husky Energy included active members in its DB plan annuitization

Copyright © 2021 Transcontinental Media G.P. Originally published on benefitscanada.com

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