Brent Simmons is head of defined benefit solutions at Sun Life.
These views are those of the author and not necessarily those of the Canadian Investment Review.
With October inflation hitting an 18-year high, inflation risk is back on the radar of plan sponsors providing inflation-linked defined benefit pensions. In the past, it’s been challenging to hedge inflation risk. Fortunately, more efficient solutions have emerged over the last several years. What is inflation risk? For a plan that provides inflation-linked benefits, inflation […]
The recent announcement that General Motors of Canada Co. purchased $1.8 billion of annuities for its salaried pension plan is creating a lot of excitement. GM Canada joins a growing list of plan sponsors who’ve purchased sizeable annuities in the last few years: Stelco Inc. ($885 million), Alcoa Corp. ($750 million), Rio Tinto Group ($560 […]
Much has been written about how 2020 was unprecedented, challenging and exhausting — take your pick of adjectives. It was also a white-knuckle ride for many Canadian defined benefit plan sponsors as they watched the funded status of their pension plans plummet sharply and then rebound. Most plans’ funded statuses are now at, or even […]
Defined benefit pension plan sponsors who are interested in better pension risk management for their retirees have two main strategies to consider: They can either transfer their pension risk by buying an annuity or they can retain it. Plan hibernation for retirees refers to a strategy of retaining pension risk, but closely matching the plan’s […]
At the time of my last column in May, many pension plan sponsors were catching their breath after watching funding levels take a roller coaster ride. After a steep drop earlier in the year, funding levels were slowly recovering. However, market uncertainty remained and it wasn’t clear what was coming next. Thankfully the last few […]
It’s hard to believe that just recently, people weren’t cutting their own hair or binge-watching Tiger King. At the beginning of the year, defined benefit funding levels were at record highs and many pension plan sponsors were considering reducing their pension risk. Fast forward a few months and the novel coronavirus has turned the world […]
Pension plans are protecting themselves from market ups and downs by matching assets to liabilities
Today, most plan sponsors’ contributions to their DB plans are being driven by the results of their pension plans’ solvency valuations.
Despite tastes for beaver tails and poutine, Canadians are living longer than ever before. And if you’re an employer with a DB pension plan, it probably means that you’ll be paying pensions to your retirees for longer than you expect.
With interest rates stuck at historic lows, we’re at a point where the “annuities are expensive” mantra is conventional wisdom and rarely questioned. The purpose of this article is to explore this notion and quantify what “expensive” really means.