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Canadian life expectancy at age 65 has increased by about five years since the early 1970s, or a rate of more than a year a decade. There seems to be no evidence that this rate of increase is slowing down. As expectations for life expectancies rise, so too do pension plan liabilities; in fact, a one-year increase in life expectancy at age 65 increase liabilities by approximately 3% - 4%.
Globally, there is a growing shift of assets from pension plans to insurance companies, particularly in the United Kingdom and United States, where a number of organizations have moved towards the partial settlement of their pension plans through the transfer of assets and liabilities from plan sponsor to financial institutions, with the risks often ending up in the re-insurance market due to the size of these settlements. In Canada, this shift has been slower for large settlements, but is expected to grow.
Aon can help organizations address their long-term plan risks
Aon is a global leader in advisory services for pension risk settlement transfer solutions, bringing plan sponsors the expertise and the tools they need to effectively assess and mitigate longevity risk. Aon has acted as lead advisor in many of the largest pension risk settlement transfers in the United Kingdom and United States, and in Canada is actively working with plan sponsors as they consider longevity risk solutions.
Whether plan sponsors are considering the complete settlement of liabilities, are looking to insure against longevity risk or simply want to establish better long-term risk parameters, Aon can provide sponsors with a comprehensive view of their plans, participants and options to meet their specific needs.
Our offerings include: