Laurentian Bank De-risks $60M Pension in Strategic Overhaul

MONTRÉAL, QC – January 09, 2026

Laurentian Bank of Canada has announced a significant strategic move to de-risk its balance sheet, transferring approximately $60 million in pension obligations to a Canadian insurer. The transaction, executed through the purchase of group annuity contracts, shifts the responsibility for pension payments for about 400 retirees, beneficiaries, and deferred members from three of the bank's registered defined benefit plans.

This decision marks another step in the bank's ongoing efforts to simplify its operations and reduce long-term financial volatility. While the bank stated the deal will have no significant impact on its first-quarter financial results for 2026, the long-term implications align with a major strategic shift occurring across Canada's corporate landscape, where companies are increasingly offloading legacy pension risks to specialized insurers.

The Great Pension Hand-Off

Laurentian Bank's action is not an isolated event but rather part of a booming market for Pension Risk Transfers (PRTs) in Canada. The Canadian PRT market has seen explosive growth, with asset transfers projected to surpass $10 billion annually. This surge is fueled by a confluence of favorable economic conditions and strategic imperatives.

Improved solvency ratios in many defined benefit (DB) plans, a result of higher interest rates and strong market performance, have made it financially viable for companies to purchase annuities that cover their pension promises. By doing so, plan sponsors like Laurentian Bank transfer several key risks to an insurer, including:

• Longevity Risk: The financial risk that pensioners will live longer than actuarial models predict, increasing total payout obligations.
• Market Risk: The risk of investment asset values declining, creating a funding shortfall.
• Administrative Burden: The ongoing costs and complexity associated with managing pension payments, compliance, and member communications.

This de-risking trend is further encouraged by regulatory developments. The finalization of Basel III reforms incentivizes banks to use their capital more efficiently, while federal legislation like Bill C-228 has prompted more plan sponsors to secure pension liabilities. The transaction type used by Laurentian, a group annuity buy-out, is the most definitive form of PRT. It involves the insurer taking on the direct responsibility for making all future monthly payments to the covered plan members, effectively removing the obligation from the company's books entirely.

Redefining Security for Retirees

For the 400 individuals affected by the transfer, this move is designed to enhance the long-term security of their retirement income. While the administrator of their benefits will change starting in April 2026, the underlying promise is now backed by two additional layers of protection.

First, the obligation is held by a major Canadian insurer whose core business is managing long-term financial commitments, unlike a bank whose primary focus is commercial and retail banking. In the press release, Yvan Deschamps, Chief Financial Officer at Laurentian Bank, highlighted this point, stating, "We are pleased to have reached this agreement which helps ensure that retirees, beneficiaries, and deferred members can receive their benefits from a leading Canadian insurer recognized for its expertise and ability to sustainably manage long-term commitments."

Second, and critically, the benefits for these participants will now be protected by Assuris. As the life insurance compensation association designated under Canadian federal law, Assuris safeguards policyholders in the unlikely event that their life insurance company fails. It guarantees that annuitants will retain at least 90% of their promised monthly income, providing a robust safety net and significant peace of mind.

This transfer only impacts the specified group of retirees and deferred members. The pension benefits for Laurentian Bank's active employees remain unchanged and continue to be the responsibility of the bank.

A Leaner Future and Sharpened Focus

Beyond securing retiree benefits, the pension transfer is a key component of Laurentian Bank's broader corporate strategy. The bank is in the midst of a multi-year transformation, dubbed "Our Path Forward," which involves pivoting away from retail banking to become a more focused specialty commercial bank. This strategic realignment emphasizes operational simplification, risk reduction, and the efficient allocation of capital.

Offloading pension liabilities directly supports these goals. It removes a source of non-operating financial volatility from the bank's balance sheet, allowing management to concentrate resources on its core business activities. The reduction in administrative costs further streamlines operations. TELUS Health, a firm with deep expertise in pension risk management, advised the bank on the transaction, underscoring the complexity and strategic importance of the deal.

This is not the first time Laurentian Bank has pursued such a strategy. In June 2021, the bank executed a much larger de-risking transaction, transferring approximately $350 million in pension obligations. That move resulted in a significant reduction in its overall pension liabilities and generated a net settlement gain. The latest $60 million transfer demonstrates a consistent, long-term approach to methodically managing and reducing legacy obligations.

By systematically de-risking its pension plans, Laurentian Bank not only strengthens its own financial position but also aligns its operational structure with its forward-looking vision as a more agile and specialized financial institution. This strategic maneuver simultaneously fulfills a fiduciary duty to its past employees while paving a clearer path for the bank's future growth.