Acceleration of group annuity purchases in Canada

Acceleration of group annuity purchases in Canada
Acceleration of group annuity purchases in Canada

This is triple the average transaction volume recorded during the first quarters of 2020 to 2023, which was approximately $0.3 billion.

The increase is significant compared to the first quarter of 2023 ($0.6 billion), which was already double the first quarter of 2022.

Usually, the first quarter is the quietest when it comes to group annuity purchases. With the second half of 2023 having been the most active in recent years, this increase “could be caused by the fact that plan sponsors took advantage of opportunities to carry out transactions at a usually quieter time of the year, thus avoiding periods of high activity such as the last quarter “possible that the increase in activity is mainly due to a greater number of transactions”, explains the report.

Telus Health expects this trend to continue throughout the year. “It is possible that some insurers will reassess their volume targets for 2024, given that they have already met their targets during the first quarter and to better reflect market activity levels. »

This could encourage some insurers to become more selective much earlier in the year. Plan sponsors considering risk transfer should therefore position themselves early, the report recommends.

As of March 31, 2024, the accounting discount rate for a typical pension plan was approximately 4.9%, while the annuity purchase discount rate was also approximately 4.9%. The gap between the two rates has therefore narrowed compared to the end of 2023.

#Canada

-

-

PREV Creation of a first green maritime corridor between Quebec and Newfoundland
NEXT Auda. Three days of electro festival in an exceptional location: here is the program