Under the new longevity insurance deal, CSS Pension Plan will transfer longevity risk for CAD660m ($501.49m) of pension plan liabilities to Co-operators
The Co-operators, a Canadian insurance company, has signed a new longevity insurance deal with the Co-operative Superannuation Society Pension Plan (CSS Pension Plan) to cover more than 6,300 pensioners of the latter.
The CSS Pension Plan is considered to be among the oldest and largest defined contribution pension plans (DC pension plans) in Canada with more than CAD4bn ($3.04bn) in assets.
The defined contribution plan is said to offer optional guaranteed lifetime retirement income.
CSS Pension Plan to transfer $501m pension plan liabilities to Co-operators
Under the new longevity insurance deal with Co-operators, CSS Pension Plan will transfer longevity risk for CAD660m ($501.49m) of pension plan liabilities to the former.
The Canadian insurance company will receive quarterly premium payments and in exchange of that will pay the actual pension benefit amounts to the DC pension plan on a quarterly basis. The CSS Pension Plan will be full responsible for monthly pension payments to pensioners.
CSS Pension Plan executive director Martin McInnis said: “CSS is very proud to have been providing an in-plan annuity option to our members for close to 50 years.
“Our agreement with Co-operators is a proactive and innovative approach that prudently protects our plan’s annuity offering against longevity risk and positions CSS to continue to meet the retirement income needs of our members well into the future.”
Co-operators had prevailed in a competitive bid process to win the customised insurance contract, the terms of which it negotiated with Aon, which advised the CSS Pension Plan.
Co-operators CEO Rob Wesseling said: “We’re thrilled to have partnered with the Co-operative Superannuation Society (CSS) to develop a customized solution for their longevity risk.
“The Co-operators is well positioned to offer longevity solutions to the Canadian market, and we recognize this risk is a growing concern for Canadian retirees and pension plan providers throughout the country.”
The CSS Pension Plan exclusively offers retirement products and services to co-operative and credit union employees. The DC pension plan claims to currently serve more than 330 employers and 48,000 current and former co-operative and credit union employees in eight Canadian provinces and territories.