Bell Canada Enterprises (BCE) has transferred $5 billion of its pension plan longevity risk liabilities to Sun Life of Canada.
In a press release announcing the agreement, Sun Life says that it is the first deal of its kind in North America; BCE's pension plan will pay monthly premiums to Sun Life while Sun Life will make monthly pension payments into the plan for the lifetime of existing pensioners. BCE will remain fully responsible for the pension plan and its obligations to Bell pensioners.
Siim Vanaselja, chief financial officer at BCE, says that the transfer will provide “greater protection and improved security” for Bell Canada pensioners, and describes the agreement as “an innovative way to de-risk pension obligations by taking proactive measures to guard against longevity risk without the requirement for additional cash contributions.”
Sun Life plans to reinsure a portion of the longevity risk with RGA Canada and SCOR Global Life.