DB plans at 132% median solvency complete $6.8 billion in annuity and inflation‑linked deals
Canadian defined benefit (DB) plans finished 2025 with some of the strongest solvency levels on record – and many sponsors used that position to transfer risk off their balance sheets.
Solvency strength opens the de‑risking window
According to Mercer’s Pension Health Pulse, the median solvency ratio in its DB pension database closed 2025 at 132 percent, a 7‑percentage‑point jump between 31 December 2024 and 31 December 2025.
The proportion of plans with solvency ratios above 100 percent rose from 88 percent to 92 percent in 2025.
That funding backdrop gave many sponsors room to secure benefits and reduce risk rather than simply ride out volatility.
PRT market stays resilient despite headwinds
Sun Life’s Industry Watch 2025 report says the Canadian pension risk transfer (PRT) market “proved resilient” in 2025 despite tariffs, geopolitical risk and other external pressures.
Market data from Sun Life and Limra show annual Canadian PRT volumes rising from about $2.7bn in 2016 to $11.0bn in 2024, with 2025 coming in at $6.8bn.
Transactions below and above $800m both featured, indicating activity across a range of plan sizes.
In 2025, 115 sponsors purchased group annuities; around 25 had done so before, while about 90 entered the PRT market for the first time.
Those deals secured part or all of the DB benefits of 39,000 members, bringing the total to more than 175,000 members whose benefits have been secured since 2021.
Back‑loaded deal activity
Industry Watch 2025 notes that the year began slowly but accelerated later.
After a soft first half, insurers “mobilized quickly” in the second half to capitalise on market opportunities and meet sponsor timelines.
Sun Life and Limra data show about $1.55bn of PRT volume in Q1–Q2 and roughly $5.27bn in Q3–Q4.
Inflation‑linked annuities anchor indexed de‑risking
For the second year in a row, inflation‑linked annuity purchases exceeded $1bn of Canadian PRT volume.
In 2025, sponsors bought $1.3bn of inflation‑linked annuities, with transactions ranging from under $1m to more than $400m.
Thirty‑five DB sponsors transferred inflation risk on indexed benefits to insurers, covering indexed plans of various sizes.
Innovation for complex plans and assets
Sun Life highlights a series of 2025 transactions where sponsors, consultants and insurers tailored structures to plan‑specific constraints.
Examples include plans with illiquid assets, where premium payment schedules aligned with asset‑liquidation needs, and arrangements with deferred premium payments that still secured member benefits immediately.
Sponsors also executed deals for plans with complex portability rules, indexation features and remarriage provisions.
Industry Watch 2025 also notes that more than 10 consulting firms provided de‑risking advice that led directly to completed transactions.
From one‑off trades to billion‑dollar programs
Twelve Canadian organisations have now transferred more than $1bn of DB liabilities each to insurers, including three that crossed that threshold since 2023.
Some sponsors passed $1bn in a single transaction, while others reached that level through phased programs of up to 14 deals.
Sun Life’s footprint and 2026 pipeline
Sun Life says it made more than $1.4bn in annual pension payments covering over 130,000 Canadians, and has completed more than $24bn in Canadian PRT transactions since 2008, representing a 33 percent market share over that period based on Limra figures.
The firm describes its early‑2026 pipeline as “vibrant,” with “many innovative deal discussions” underway, and notes that DB Solutions now sits within the newly formed Sun Life Asset Management pillar.
