BCE has reached an agreement to transfer the longevity risk for $5 billion of pension plan liabilities to Sun Life Financial.
Under this new longevity insurance agreement, the first of its kind in North America, the Bell Canada pension plan will pay monthly premiums to Sun Life. In exchange, Sun Life will make monthly pension payments into the plan for the lifetime of existing pensioners. BCE currently provides both DB and DC plans.
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BCE will maintain full responsibility for the Bell pension plan and related payments to pensioners.
“This agreement is an innovative way to de-risk pension obligations by taking proactive measures to guard against longevity risk without the requirement for additional cash contributions,” says Siim Vanaselja, chief financial officer for BCE and Bell Canada.
“With our expertise in assessing and managing the financial risks that can impact defined benefit plans, Sun Life is perfectly positioned to help BCE and other Canadian companies take longevity risk off the table so they can focus even more on their core businesses,” says Kevin Dougherty, president of Sun Life Financial Canada.
Sun Life will reinsure a portion of the longevity risk to RGA Canada and SCOR Global Life.
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