Canadian Pension Risk Transfer Market Trends in 2025
In 2025, Canadian defined benefit (DB) pension plans achieved historically high solvency levels, allowing many plan sponsors to transfer risk from their balance sheets. According to Mercer’s Pension Health Pulse, the median solvency ratio for these plans reached an impressive 132% by the end of the year, up significantly from 2024.
This robust solvency environment enabled plan sponsors to concentrate on securing benefits and risk mitigation strategies, rather than merely managing market volatility. Sun Life's Industry Watch 2025 reported that the Canadian pension risk transfer (PRT) market maintained its strength throughout the year, despite external pressures like tariffs and geopolitical uncertainties. Their data, along with Limra's, revealed that PRT volumes reached $11 billion in 2024, but moderated to $6.8 billion in 2025.
The year featured diverse transaction sizes, with both small and large deals, indicating extensive activity across various plan sizes. A total of 115 sponsors participated in group annuity purchases, with around 90 newcomers to the PRT market, covering the DB benefits of 39,000 members. Since 2021, benefits for over 175,000 members have been secured through these transactions.
Despite a slow beginning to 2025, PRT market activity surged in the latter half, as insurers adeptly seized market opportunities and addressed sponsor needs. Sun Life and Limra data highlighted that PRT volumes started at $1.55 billion in the first half but rose significantly to $5.27 billion in the latter half of the year.
Emerging Trends and Strategic Initiatives
Inflation-linked annuities became a notable trend for the second year, surpassing $1 billion in purchases. In 2025, $1.3 billion worth of inflation-linked annuities were transacted, covering various transaction sizes, with 35 DB sponsors transferring inflation risks on indexed benefits to insurers.
Sun Life emphasized the innovative strategies of 2025, where sponsors, consultants, and insurers collaborated to tackle specific challenges like illiquid asset plans and complex benefit structures. These efforts addressed premium payment schedules tied to asset liquidation, deferred premiums, and plans with unique portability and indexation rules.
The year also witnessed significant growth in large-scale de-risking initiatives, with 12 Canadian organizations transferring over $1 billion in liabilities to insurers since 2023. Some utilized single large transactions, while others pursued phased approaches.
Sun Life has played a pivotal role in shaping the PRT landscape, having executed over $24 billion in Canadian transactions since 2008. The company anticipates a promising start to 2026, fueled by a dynamic pipeline of innovative transactions, bolstered by the integration of DB Solutions within Sun Life Asset Management.