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Pension Hub

Decumulation Options for Employer Pension Plan Design:

Theory to Practice

For years, policymakers, employer pension plan sponsors, consulting professionals, financial advisors, and academics have focused on accumulating retirement wealth. But with Canadian baby boomers now entering retirement – with longer life expectancy, fewer anticipated sources of family support, and a greater dependency on private savings to sustain them – better decumulation options are urgently needed to protect seniors from running out of savings and provide them the affordable, secure retirement income they want, when they need it, without shifting the cost and risk burden to the rest of working Canadians.

In industrialized countries around the world, there is a growing consensus that pooled-risk annuities[1] and longevity insurance present two powerful decumulation solutions – both of which effectively enable retiring Canadians to pool their financial savings to better protect those who live to advanced ages. This research explores the value of pooled-risk annuities and longevity insurance as a design feature for employer pension plans seeking to provide greater advanced-life income security to their members. While of particular interest to sponsors of DC and target benefit plans, these two solutions similarly benefit DB plans by providing a drawdown option for non-career members without sufficient secure later-life income from their DB benefits (in combination with OAS/GIS and CPP). These solutions would give members full freedom of choice, help overcome behavioural biases against annuities, encourage members to proactively prepare for advanced ages and allow them to maintain control of the vast majority of their financial savings while also improving retirement security – benefitting not just Canada’s elderly population, but also the Canadian economy on the whole.



Ryerson University


Bonnie-Jeanne MacDonald








Bonnie-Jeanne MacDonald

Bonnie-Jeanne is the Senior Research Fellow of the National Institute of Ageing (NIA) at Ryerson University. She is also a Fellow of the Society of Actuaries and the resident scholar at Eckler Ltd.

Her research focuses on the retirement and health programs available to Canada's aging population with the goal of advancing the financial retirement security landscape. Bringing together leading industry experts and building on academic best practices coupled with innovative research, her insightful perspectives continue to help people better prepare for retirement.

Bonnie-Jeanne is a prolific speaker and researcher on the topic of measuring retirement income adequacy. In 2014, her research created the concept of the Living Standard Replacement Rate (LSRR). That paper won the 2014 Pension, Benefits and Social Security Scientific Committee Award Prize for Best Paper at the 30th International Congress of Actuaries. Already helping sponsors and members of retirement plans in the Canadian retirement service industry, the LSRR work is also informing professionals as it has been added to the Society of Actuaries Fellowship examination requirements for new actuaries.

A recipient of the 2001 Gold Medal in Actuarial Science (Hon BSc) at the University of Western Ontario,

Bonnie-Jeanne received her FSA in 2004, and also holds a PhD in Actuarial Mathematics from Scotland's

Heriot-Watt University. In 2011, she was chosen one of the Canada's top young economists and attended the Lindau Nobel Laureate Meeting in Germany.