Canadian Institute of Actuaries urges Ottawa to reconsider halting real return bonds issuances
February 27, 2023
The Canadian Institute of Actuaries (CIA) is advising the federal government to reconsider halting real return bonds (RRB) issuances - Benefits Canada reports. According to the article, CIA president Hélène Pouliot noted in a letter to Finance Minister Chrystia Freeland, that approximately $1 trillion in defined benefit (DB) plan assets (covering around 3 million plan members) are tied to inflation-linked benefits.
Benefits Canada outlines in the article that DB plans with inflation-linked benefits use RRBs (i) as liability-matching assets to hedge against inflation risks; and (ii) to determine commuted values. They also state that withdrawal of RRBs from the market could heighten financial volatility risks for DB plans and decrease benefit security for plan members.
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