Defined benefit pension plan sponsors transferred $6.8 billion of pension risk to group annuities in 2025, according to a recent report by Sun Life.
Of the $6.8 billion in transactions, $1.3 billion were for inflation-linked annuities from 35 plan sponsors.
In 2024, plan sponsors transferred a record $11 billion, with $3.6 billion in three large deals each worth more than $800 million. Without the jumbo deals, 2024 saw $7.4 billion of transactions, similar to the $7.8 billion seen in 2023.
U.S. tariffs in early 2025 and geopolitical risks throughout the year distracted employers away from thinking about pension risk strategies, Mathieu Tessier, vice-president of defined benefit solutions at Sun Life, said in an interview. “A lot of the plan sponsors who meant to transact in 2025 expressed the desire to do so in the future, making this more of a delay than a change in strategy.”
Tessier said he expects transaction volume to pick up in 2026 as plan sponsors expressed interest in late 2025.
Last year, 115 plan sponsors purchased group annuities, with 90 being first-time buyers. The transactions included 39,000 plan members who had all or part of their defined benefit pensions secured.
More than 500 plan sponsors have purchased group annuities in the last five years, Sun Life estimated. Some of these transactions have been made public. Last year, Fraser Papers transferred $114 million and Yellow Pages transferred $210 million. So far this year, Laurentian Bank, which will be acquired by Fairstone Bank and National Bank, has made a $60-million transaction.