Innovation in Retirement Investment Solutions

Fraser Stark & Simon Barcelon


14 Sep 2022


It's great to see another investment fund incorporating longevity risk pooling into its structure. This concept presents an opportunity for Canadian investors to help ensure their assets last their entire retirement in a way that was traditionally only available through defined benefit (DB) pension plans or lifetime annuities. We love that there are now more options for Canadians looking for financial security in retirement, aiming to protect their finances from the risk that they live longer than expected. The challenge of how to decumulate financial assets in retirement, over a period of uncertain duration, is a considerable one – and it's only growing as Canadians live longer and fewer have DB pensions through their employers.

While we certainly look forward to continuing to help Canadian retirees, we’re encouraged to see other investment firms follow our innovation. The addition of new funds further demonstrates for Canadians the power of a growing set of products that strive to offer financial security in retirement, and these products will play a vital and growing role as we go forward. Another asset management company entering this space 15 months after we launched the Longevity Pension Fund helps to validate this concept.

It's important to note that the concept of offering retirement income through longevity risk pooling without a guarantee is not new – it has been around for decades, or arguably for centuries via the “tontine” structure. Our foundational innovation in 2021 was to make it widely available as a mutual fund, democratizing a solution that has traditionally been available only within pensions, making it universally available for any Canadian with an investment account. Our other key innovation was to put a tremendous amount of structure and rigour around the income policy, the risk oversight approach, the external validation and diverse advisory committee.

Pension solutions vs Mutual Fund solutionFor illustrative purposes only.

Now that additional mutual funds in Canada are incorporating longevity credits to raise returns while investors are living, many people will be considering which fund structure best aligns with their overall objectives as a retired investor. We’re very confident that the Longevity Pension Fund is the most powerful and outcome-oriented solution for a retiree seeking income to achieve their life goals with confidence.

  • LPF is designed first and foremost to address a retired investor’s core need for a sustainable stream of income that is designed and expected to increase significantly over time and lasts as long as each investor is alive.

  • Monthly distributions starting at the beginning of retirement create tax efficiency and enable Longevity to fit cleanly within RRSP and RRIF accounts (since distribution levels align to the annual RRIF minimum withdrawals set by the CRA), making it easy to incorporate Longevity into a holistic retirement plan.

  • The Income level is optimized to balance an investor’s ability to spend throughout retirement while ensuring that the level is sustainable, eliminating the risk of depleting their savings.

  • Accrued longevity credits are distributed via annual adjustments to distribution levels to maximize the number of investors benefitting from the risk pooling structure.

We’re incredibly proud of what the Longevity Pension Fund does for Canadians in retirement and the structure, rigour, and transparency we embedded into the fund’s design and ongoing management. We developed and published the Income Policy in conjunction with LifeWorks, a third-party actuarial firm, which defines precisely how we will adjust the distribution levels each year and clearly shows the expected evolution of distribution levels over time using conservative assumptions. We also assembled a four-person Advisory Committee consisting of world-renowned experts in the retirement space, representing academia, pension plan design, actuarial science, financial planning, and pension investing & operations. This group meets regularly to provide feedback on critical fund decisions and explore ways to expand our fund offering to help Canadians retire more confidently. Doing these things has earned Longevity coverage from prominent media around the world, including the Globe & Mail, Wealth Professional, and Forbes, showing that the problem the Longevity Pension Fund aims to solve is as relevant in other countries as it is here in Canada.

Because this type of investment product is so unique, there are limited tried-and-tested frameworks adopted universally by advisors and planners that combine these types of solutions within a traditional portfolio. We are happy to work with advisors or investors directly to help visualize how the Longevity Pension Fund can fit within a portfolio and enhance a retirement income strategy.

We’re working tirelessly to create a world where more people see retirement as an opportunity, not a challenge. Our mission is to give Canadians the stability and confidence to make the most of their post-work years, which includes educating Canadians on why this construct is so important and effective in building retirement plans.

Speak with your advisor to see how Longevity can fit into your portfolio, or contact us if you’d like to speak with our Retirement Income Specialist or have questions about the fund.

Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. The prospectus contains important detailed information about the investment fund. Please read the prospectus before investing. There is no assurance that any fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. The Fund has a unique mutual fund structure. Most mutual funds redeem at their associated Net Asset Value (NAV). In contrast, redemptions in the decumulation class of the Fund (whether voluntary or at death) will occur at the lesser of NAV or original purchase price less distributions paid.

 The Longevity Pension Fund is managed by Purpose Investments Inc. The document is not investment advice, nor is it tailored to the needs or circumstances of any investor. Talk to your investment advisor to determine if the Longevity Pension Fund is right for you and always read the prospectus before investing. Nothing on this document shall be considered a solicitation to buy or an offer to sell, or a recommendation for, a security, or any other product or service, to any person in any jurisdiction where such solicitation, offer, recommendation, purchase or sale would be unlawful under the laws of that jurisdiction. No securities commission or similar regulatory authority has reviewed this document and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable, however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice.