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Preliminary Communication for Assumptions for Hypothetical Wind-Up and Solvency Valuations with Effective Dates on or after April 30, 2020

Since March 31, 2020 there was continued volatility in the financial markets due to the
COVID-19 pandemic. In particular, there was a significant decline in the credit spreads applicable to provincial and corporate fixed income securities. As a result of this extreme volatility, the Committee on Pension Plan Financial Reporting (PPFRC) conducted an off-cycle review of group annuity pricing conditions as at April 30, 2020.

To provide timely information to actuaries, this memorandum summarizes the PPFRC’s discount rate and mortality recommendations for estimating the cost of purchasing annuities. Furthermore, it provides updates to the use of alternate settlement methods guidance related to the increased capacity of the group annuity purchase market.

Any work based on this preliminary guidance should be accompanied by appropriate caveats about its preliminary nature and potential for revision. Further, it would not be appropriate to use this preliminary guidance for the purpose of any formal reporting or regulatory filings, nor in any marketing capacity.

For any questions, contact Jared Mickall, Chair, PPFRC.

Announcement Number2020-05(07183) May 20, 2020