As we move into 2025, significant changes and developments are expected in the pensions and employee benefits landscape.

  1. Pension De-risking with Buy-in and Buy-out Annuities: The momentum of utilizing buy-in and buy-out annuities to mitigate risks in defined benefit pension plans is expected to continue. Favorable conditions, such as sustained higher interest rates and an increase in plans with surplus assets, make annuity purchases an attractive option for plan sponsors.
  2. Accessing Pension Surplus: With more defined benefit plans achieving surplus funding, sponsors are keen to explore avenues for accessing these excess funds. This includes considering contribution holidays and potential surplus withdrawals from both ongoing and terminated plans.
  3. Enhanced Pension Plan Governance: Recent guidelines from regulatory bodies, including the Canadian Association of Pension Supervisory Authorities (CAPSA) and the Financial Services Regulatory Authority of Ontario (FSRA), emphasize robust risk management and governance practices. Plan sponsors and administrators will need to align their operations with this new regulatory framework.
  4. Decumulation Options in Defined Contribution Plans: Legislative amendments across Canada now permit variable life benefits within defined contribution plans. This change is prompting more plan sponsors to consider offering these benefits, especially following Ontario's recent consultation on the matter.
  5. Encouraging Domestic Pension Investments: The federal government's initiative to incentivize pension plans to invest more in Canadian entities includes proposals to relax the "30 per cent rule." This could open new investment opportunities for plan administrators, particularly those overseeing large funds.
  6. Integration of Virtual Healthcare: The pandemic accelerated the adoption of virtual healthcare services, a trend that persists. Employers are now navigating associated tax and privacy considerations as they incorporate these services into their benefits offerings.

Staying informed and proactive in response to these trends will be crucial for stakeholders in the pensions and employee benefits sector throughout 2025.