Loblaw Cos. Ltd., Brampton, Ontario, entered into an annuity buyout of C$350 million ($263 million) of pension liabilities with Sun Life Financial and BMO Insurance, the firms announced Tuesday.
Each insurer will assume the investment, longevity and inflation risk of about half of the C$350 million, with Loblaw paying a single premium, said Brent Simmons, Sun Life senior managing director, defined benefit solutions.
The buyout agreement, which covers current Loblaw retirees, was reached in December, said Marco Dickner, retirement risk management leader, Canada at Willis Towers Watson. Willis Towers Watson is Loblaw’s pension fund consultant.
Loblaw’s defined benefit plans remain open, Mr. Dickner said. The company had C$2.17 billion in defined benefit assets as of Dec. 31, 2015, according to its latest annual report.