Mercer Canada | DB Destination: Pension Risk Transfers

Mercer Canada | DB Destination: Pension Risk Transfers

Our Thinking / DB Destinations

Is now the time to think about Defined Benefit Pension Risk Transfers?
DB Destination: Pension Risk Transfers
Calendar25 July 2017

The Canadian Retirement Plan Landscape Is Shifting

Are you ready to navigate the new terrain?

Plan sponsors like you have watched the global market move away from defined benefits pension plans to defined contribution plans. Now the trend has arrived here, on Canadian soil.

  • DB plans are declining. According to Statistics Canada, fewer Canadians are enrolled in DB plans. By contrast, DC and hybrid plan enrollment is increasing.
  • Frozen assets are thawing. Frozen assets and closed plans are estimated at $700 billion, which is falling as businesses shift their plan structures.
  • The annuity market is expanding. The Canadian annuity market is valued at just over $2.5 billion, a number expected to grow alongside increasing pension risk transfers.

What Are Pension Risk Transfers?

Plan sponsors who choose to move from DB plans will have liabilities stemming from their DB plans, some of them lasting for decades. Pension risk transfers shift these liabilities from the plan sponsor making you and your retired and existing employees sleep better at night – knowing that the plan liabilities are covered.

Managing these risks and liabilities of a DB plan is a major challenge. Canadian businesses must be diligent and strategic if plans are to meet the needs of shareholders, plan members, and other stakeholders.

By transferring these risks and liabilities, you can increase stability. You must be diligent and strategic when transferring risk in order to meet the needs of shareholders, plan, members, and other stakeholders. Finding the right annuities partner at the right time, however, isn’t easy.

Taking Strategic Action

As you journey toward your DB destination, you can take steps to effectively manage legacy liabilities. You can start right now.

  1. Be Prepared. Treat pension risk transfers as you would any major corporate transaction. Inspire confidence by engaging potential insurers in dialogue early.
  2. Monitor the Market. Time is on your side when it comes to pension risk transfers. Keep an eye on the market using the Mercer Pension Risk Exchange (MPRE) and ensure you’re getting the best deal.
  3. Think Long Term. Pension liabilities exist even after your company’s transition. Follow emerging trends and remember you’re here for the long haul as you journey toward your DB destination.
  4. Contact Us. Managing pension risks is daunting. We’re here to help you every step of the way.
  Read more about how to manage pension risk transfers.
To read the full report, complete and submit the form below. Note you may need to enable pop-ups from mercer.ca to receive the file.
*Required Fields

By clicking Submit, I agree to the use of my personal information according to the Mercer Privacy Statement. I understand that my personal information may be transferred for processing outside my country of residence, where standards of data protection may be different.