Historic transaction in the Canadian pension market

Historic transaction in the Canadian pension market
Historic transaction in the Canadian pension market

Advised by Willis Towers Watson, a leading global advisory, brokerage and solutions firm, Sun Life, iA Financial Group and Brookfield Annuities, on Wednesday announced a $ 1.8 billion annuity purchase transaction for General Motors Canada.

Sun Life alone took on $ 1.1 billion of this annuity buyback operation, which involves more than 6,000 members of the GM Canada salaried employee pension plan who retired before June 1, 2020. iA Financial Group’s share is $ 600 million, while that of Brookfield Annuities stands at $ 100 million.

As part of this agreement, most of the pension plan’s investments were not sold, but were transferred in kind to partner insurers.

“This transaction goes down in history as the largest in Canada with a single insurer. It shows that major transactions are now possible in the country, even in a volatile market caused by the current pandemic, ”read a press release on Wednesday.

For Marco Dickner, head of retirement risk management at Willis Towers Watson, this agreement shows that “Canadian insurers can now effectively meet the needs of plan sponsors in terms of very large transactions”, which is “a crucial step. in the evolution of retirement risk transfers in Canada ”.

Under an annuity purchase agreement with buyback of commitments, the insurance company is responsible for making annuity payments to plan participants in return for payment of a single premium by the plan sponsor.

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