Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • August 2013
08

Canada's soaring life expectancy 'presents DB pension challenge'

Open-access content Wednesday 7th August 2013 — updated 5.13pm, Wednesday 29th April 2020

Women in Canada can expect to live to almost 90 years old and men nearly as long, posing challenges for pension fund sponsors.

New proposed mortality tables issued by the Canadian Institute of Actuaries last week show that for a woman aged 60, life expectancy has increased by 2.7 years to 29.4 years, compared with that in the mortality tables now in use.

For men at 60, life expectancy had increased by 2.9 years to 27.3 years.

Consultancy Towers Watson said the new tables carried significant implications for sponsors of defined benefit (DB) pension plans, which typically pay a pre-determined pension for the life of the retiree.

As life expectancy increases, plan sponsors would need to cover more pensioners and for longer periods, increasing their liabilities and so in turn requiring them to take in higher pension contributions.

Adoption of the proposed mortality tables by schemes could immediately increase pension accounting liabilities by 5% to 10% for many plans, potentially affecting companies' income statements and balance sheets.

Towers Watson senior retirement consultant Gavin Benjamin said: 'This study highlights the risk that increasing life expectancy can pose for DB plan sponsors.

'Just as sponsors were beginning to see a reduction in their pension deficits due to improvements in the global equity markets and rising interest rates this year, the increase in life expectancy suggested could reverse much of this gain.'

Longer lifespans also carried risks for sponsors of defined contribution (DC) plans, Towers Watson warned, as members would need to save more to see them through a longer period of retirement.

Michelle Loder, the consultancy's Canadian defined contribution leader said: 'This could result in employees delaying their retirement until they have accumulated sufficient retirement savings, possibly challenging employers' ability to manage career progression and workforce objectives.'

Providers of public sector pension plans also face the challenge of life expectancy growing even longer for employees in this field than in the private sector.

Benjamin said: 'While this may be good news for public sector employees and pensioners who are largely covered by DB plans, there will be financial implications to consider. However, policy makers will need to balance those considerations against the effective recruitment and retention benefits that DB pensions can provide.'

This article appeared in our August 2013 issue of The Actuary.
Click here to view this issue
Filed in
08
Topics
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Risk Actuary - General Insurance

London (Greater)
£60,000 - £85,000
Reference
145934

Project Actuary - Life Insurance

Midlands
£60,000 - £110,000
Reference
145933

Model Validation Actuary

London (Greater)
£60k - £80k
Reference
145932
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ