Sponsors secure $6.9 billion in 2025 annuity deals as insurers sharpen pricing despite market slowdown
After a record-smashing 2024, Canada’s group annuity market hit the brakes in 2025 – but $6.9bn in transactions still moved, and the buyers who were ready reaped some of the best pricing of the cycle.
Market cools, not collapses
The Canadian group annuity purchase market logged about $6.9bn in volume in 2025, nearly 40 percent below the $11bn seen in 2024 and roughly 10 percent under the average of the previous three years.
The slowdown tied mainly to two pressures: economic uncertainty and market volatility complicated transaction planning and liquidity management, while some sponsors shifted focus to internal priorities in a challenging economic and geopolitical environment.
Activity split into two clear phases.
Early in the year, few deals closed, which gave insurers more time per file and room to table particularly competitive quotes for sponsors ready to act quickly.
That competitiveness appears to have pulled many sponsors off the sidelines later in the year, driving a surge of transactions in the second half.
Insurers stay hungry and sharpen their strategies
Despite lower overall volume, insurers kept a steady appetite for group annuity risk.
They adjusted their strategies rather than retreating: internal reorganisations and streamlined processes aimed to make smaller‑scale transactions more manageable, and some insurers expanded their focus on inflation‑indexed annuity deals.
That increased interest in inflation‑indexed annuities heightened competition in this niche and helped plan sponsors obtain more attractive pricing conditions.
Market shares typically move around from year to year; forthcoming 2025 data will show how this intensified competition reshaped the league table.
Interest rates and accounting alignment support de‑risking
In 2025, implicit annuity purchase rates for some transactions exceeded 5 percent, giving sponsors an opportunity to lock in a high guaranteed return while transferring investment and longevity risks to insurers.
The Canadian bond market reflected a shift towards a more accommodative monetary policy stance. Inflation continued to normalise and economic growth moderated, including under the weight of a trade war.
The yield curve steepened as short‑term rates fell and long‑term rates edged up.
Credit spreads generally stayed compressed, aside from a brief widening in the spring, in a market marked by sustained demand and relatively solid corporate fundamentals.
From an accounting lens, annuity purchase rates remained broadly aligned with the discount rates used for accounting valuations, which allowed many sponsors to transact without creating material shocks in their financial statements.
What to prioritise for 2026 transactions
For sponsors eyeing a 2026 buy‑out or buy‑in, the report puts governance, planning and simulation at the centre of execution.
On governance:
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Define a clear decision‑making structure, including each party’s role and who can approve the transaction.
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Set explicit triggers to frame go/no‑go decisions.
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Schedule regular communications and training to keep stakeholders aligned on process and risks.
On planning:
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Assess the plan’s readiness by looking at interest rate risk exposure, liquidity, data quality and the plan’s overall financial position.
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Revisit the investment policy and determine how assets will be liquidated, or whether an in‑kind transfer makes sense.
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Build a data preparation plan, including a survival audit where relevant, to lift data quality and support stronger pricing.
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Work directly with insurers to capture windows of opportunity and time the transaction effectively.
On simulation:
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Use annuity purchase simulations and illustrative dashboards to test multiple scenarios and show the expected financial impact before pulling the trigger.
A methodical approach to data and a clear, pre‑agreed decision framework create a tangible edge when markets move quickly and pricing windows are short.
Mortality tables: looming CIA updates and strategy impact
Longevity assumptions will sit higher on the agenda in 2026.
The Canadian Institute of Actuaries plans to publish a new research report on retiree mortality in March, with updated mortality tables that may be used as early as 2026, particularly for going‑concern valuations as at December 31, 2025.
Actuarial standards for pension commuted values are also expected to change later in 2026 or 2027.
Normandin Beaudry notes that its own mortality study covers more than one million lives per year and uses a methodology based on income and place of residence to refine mortality estimates and pension obligation valuations.
In the context of upcoming CIA tables, more granular mortality analysis may become especially relevant for annuity purchase timing, pricing expectations and funding strategy.
Individual annuities and decumulation: a parallel track
On the member side, the material positions individual annuities as a “relevant option” in volatile markets for defined contribution and other savings plan members.
Converting a portion of savings into guaranteed lifetime income can reduce drawdown and market risks and, in some cases, provide higher income than systematic withdrawal strategies.
The document highlights five major retirement risks – investments, inflation, longevity, errors and cognitive decline – and contrasts them with four advantages of a life annuity: income for life, predictable income, guaranteed income from top Canadian insurers, and the potential for higher income in the current interest rate environment.
Together, these elements aim to “give yourself peace of mind at retirement” by cutting the number of high‑stakes financial decisions and the stress that comes with them.
