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Offering greater flexibility and decumulation products can give Canadians more confidence that they will not outlive their savings.

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The three pillars of the Canadian retirement savings system – public pensions, employer pensions and RRSPs and other sources of personal savings – provide Canadians with the means to retire. However, life expectancy across the country is rising, and Stephen Frank, CLHIA’s president and CEO, sees the need to help Canadians manage the risk of outliving their savings.

“We effectively help Canadians accumulate savings for their retirement, but we can do more to assist them in their decumulation stage,” he says, adding that CHLIA has been working with stakeholders to identify achievable and meaningful reforms for the time when people draw on their retirement savings.

Two of the life and health insurance industry’s recommendations have recently been reflected in federal budget items. One proposes to allow Canadians to use part of their retirement savings to purchase annuities providing guaranteed income for life, commencing at ages up to 85, and Mr. Frank believes this option to select a secure and predictable retirement income “makes a lot of sense.”

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He also welcomes the budget proposal to allow individuals within defined contribution pension plans to pool longevity and investment risk. “Providing a middle ground between assuming such risks individually and fully transferring these risks to insurance contracts also helps to meet consumer needs. We look forward to working with government to expand these options.”

Mr. Frank envisions expanding the concept of pooling employer plans to allow insurers the ability to spread some of the risks across multiple employer plans, thereby increasing the scale and improving efficiencies.

“We believe that Canadians start with a strong foundation that allows us to look for ways to make the system incrementally better,” he says. “By offering greater flexibility and decumulation products, we can help to ensure they are not outliving their savings and can retire with certainty.”


Produced by Randall Anthony Communications. The Globe’s editorial department was not involved in its creation.

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