March 2025
Group annuity purchases in Canada in 2024: A record shattered
In summary
- In 2024, the Canadian group annuity market reached a new high with transactions totalling $11B, an increase of 42% compared to the average of the previous three years. The year was marked by both an increase in the number of transactions and the very large size of some transactions.
- As illustrated by the Normandin Beaudry Pension Plan Financial Position Index as at December 31, 2024, the financial positions of pension plans improved in 2024. Many organizations continue to purchase annuities to crystallize gains and sometimes even improve the financial position of their plans.
- Despite increased volatility and narrowed credit spreads, the pricing offered by insurers remained attractive for Canadian pension plans.
- With the market’s enthusiasm, some smaller plans sometimes encountered difficulties finding an insurer to partner with, particularly during the second half of the year. The number of transactions concluded on a “one-on-one” basis with an insurer continued to increase in 2024. This strategy can be particularly interesting for smaller transactions that would otherwise attract less interest from insurers.
- Insurers continued to offer favourable pricing for indexed annuities despite the Government of Canada’s decision to stop issuing real return bonds in 2022. The Canadian market also saw its largest indexed annuity transaction in 2024 (transaction of over $1B).