Variable payment life annuities and the impact of gender identity on actuarial standards are among the issues the Canadian Institute of Actuaries is monitoring in 2025, says Simon Nelson, a principal at Eckler Ltd. and chair of the CIA’s pension practice committee.
A CIA task force on VPLAs will present its findings early this year, providing guidance to actuaries on the decumulation product. While VPLAs aren’t yet widely available, the 2023 federal budget proposed amendments to the Pension Benefits Standards Act and the Pooled Registered Pension Plans Act to improve retirement security for plan members and retirees through new frameworks for VPLAs.
A separate CIA task force will also soon present findings on the impact of gender identity in determining longevity risk. While the value of pension benefits have traditionally been calculated using gender as the main factor in predicting longevity, evolving views are impacting this practice.
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The organization also continues to closely monitor climate change risks for pension plan sponsors, says Nelson. “It comes up regularly when having discussions with the various chairs of the different practice committees. We’re always thinking about how we should be addressing it in our practice and what kind of guidance should we be providing.”
Legislation regarding target-benefit pension plans — including Ontario’s recently enacted target-benefit pension framework as well as recent amendments to the federal Pensions Benefits Standards Act — will also be examined in 2025, says Paul Burnell, managing director and actuary at Plenus Consultants and chair of the CIA’s target-benefit plan subcommittee.
“These target benefit rules are directed at multi-employer plans, which are typically union plans. One thing we would have liked to have seen in Ontario’s target-benefit framework — and also federally and in most other jurisdictions — is an expansion of the rules to include other groups, specifically single-employer plan sponsors.”
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Alyssa Hariton, an associate partner and defined benefit consulting lead at Telus Health and chair of the CIA’s pension plan financial reporting committee, says the organization is also conducting research on plan member mortality that will be published in 2025.
“This will be the first time we have new base tables for mortality for Canadian pensioners in more than a decade — the last ones were published in 2014. . . . I think it will be interesting to see, because we have been seeing a slowdown in mortality improvements over the last decade in other countries, such as the U.K. and the U.S, even before the pandemic.”
The organization will also be publishing a report this year on the actuarial impact of the federal government’s decision to end its real return bond program, she adds.
“We use yields on real return bonds for calculating commuted values for indexed pensions and also for estimating annuity purchase prices for pensions. . . . There isn’t an obvious replacement for real return bond yields, but [the CIA] is looking at what some of the alternative approaches might be.”
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