Enhanced Protection for Member Annuities

PRT Insights – June 2023

In March 2023, Eckler’s PRT Insights article titled “Mitigating risk to pension plan members and sponsors during an annuity purchase” was published, where we discussed the various ways that member pension benefits can be protected from insurer insolvency risk during an annuity purchase. One form of protection discussed was Assuris protection, which guarantees a certain portion of member pension benefits in the unlikely event of the insolvency of a Canadian life insurance company, from which a plan sponsor previously purchased annuities.

On May 29, 2023, Assuris announced that they have increased the protection limit for members’ monthly pensions. In the past, Assuris covered the greater of $2,000 or 85% of the monthly pension, for buy-out annuities. With the recent increase, members’ monthly pension benefits are now covered up to the greater of $5,000 or 90% of the members’ monthly pension benefits.

For buy-in annuities, the coverage is now 90% of the monthly pension payable to each member.

Some other Assuris limits were also increased, such as life insurance which is guaranteed up to $1M or 90%, whichever is greater.

The new enhanced coverage limits for Assuris apply to insurer insolvencies going forward. This is good news for plan members and plan sponsors exploring risk transfer from a defined benefit pension plan through an annuity purchase.