An Introduction to Dynamic Pension Pools: A New Chapter for Pension Income in Canada

KEY HIGHLIGHTS FROM OUR NOVEMBER 24, 2021 DISCUSSION ON DYNAMIC PENSION POOLS

 

GRI, in partnership with the National Institute of Aging, was pleased to host Dr. Bonnie-Jeanne MacDonald (Director of Financial Security Research, National Institute on Ageing), Barbara Sanders (Associate Professor, Simon Fraser University), Mitch Frazer (Partner and Chair of the Pensions and Employment Practice, Torys LLP), and Laura Strachan (Consultant, Eckler) to share highlights from their recent work, entitled “Affordable Lifetime Pension Income for a Better Tomorrow”.

This report discusses how the financial solution of Dynamic Pension pools can address the $1.5 trillion decumulation disconnect in the Canadian retirement income system.

Key takeaways from the event include:

  • 80% of Canadians in the private sector do not have a workplace pension plan. Even with adequate savings, older Canadians face a tremendous challenge in turning accumulated savings into income that will last the rest of their lives.
  • The emerging financial solution of Dynamic Pension (DP) pools can potentially address this decumulation disconnect issue. DP pools allow the participants to share longevity risk, give higher expected returns, and ensure a stable source of pension income for life.
  • DP pools bridge the gap between Traditional Life Annuity and Registered Retirement Income Fund (RRIF) by providing both income for life through longevity pooling and equity risk premium.
  • To ensure that DP pools can reach their maximum potential in the Canadian retirement income system, the regulatory framework needs to support the following six objectives:
    • Uniform treatment of registered savings
    • Universal member eligibility
    • Effective protection from longevity risk
    • Robust governance
    • Providers are willing and able to bring DP pools to scale
    • Clear, simple, and harmonized regulations

 

Download the Event Handout here Dynamic Pension Pools Handout

 

 

Bonnie-Jeanne MacDonald
Director of Financial Security Research, National Institute on Ageing, Ryerson University

Barbara Sanders
Associate Professor, Simon Fraser University

Laura Strachan
Consultant, Eckler

Mitch Frazer 
Partner and Chair, Pensions and Employment Practice, Torys LLP; Founder and Chair, National Institute on Ageing