When planning your retirement, worry about living a long life instead of dying young – MoneySense

Or, as American retirement guru Wade Pfau recently put it: “A retirement income plan should be based on planning to live, rather than planning to die.” The Michael James blogging recently highlighted that quote.

Retirement is usually about planning for an unexpectedly long life, often exacerbated by inflation. After all, a 65-year-old Canadian woman can expect to live to be 87, but there is an 11% chance that she will live to be 100.

That fact was pointed out by Fraser Stark, chairman of the Longevity Retirement Platform at Toronto-based Purpose Investments Inc., during a September presentation to the Retirement Club, which we profiled last summer. Stark’s presentation was so compelling that I decided to invest part of my recently launched RRIF in the Purpose Longevity Pension Fund (LPF). A version of Stark’s presentation may be available at YouTubeor you can cut out the highlights the Target Brochure.

Stark confirms that LPF, launched in 2021, is currently the only retail mutual fund or ETF offering longevity-protected income in Canada. Please note that LPF is not an ETF, but a traditional investment fund. It aims to generate lifelong retirement income; To do this, it has created a “unique longevity risk pooling structure.”

This reflects what noted finance professor Moshe Milevsky has long described as “tontine thinking.” See my 2022 Retired Money column on this after Guardian Capital LP announced three new tontine products under the “GuardPath” brand. However, a year ago Guardian closed the fundsso basically outside the tontine business. Apparently it’s an uphill battle competing with annuities.

Here is the complete list of wealth advisors and full-service brokers who offer this. Included are full-service brokerage firms (and/or their discount brokerage units) of the major banks including Bank of Montreal, National Bank and most recently Royal Bank on an unsolicited basis. Among the many independent companies offering it are Questrade and Qtrade. Additionally, Stark says iA Financial allows investments in LPF on an unsolicited basis.

Imitation of promised pensions

Purpose doesn’t use the term tontine to describe LPF, but it does aim to do what traditional employer-sponsored DB pensions do: in effect, those who die early subsidize the lucky few who live longer than expected.

LPF addresses the feared inflation problem by aiming to gradually increase benefit levels over time. It recently announced it will increase LPF benefits for most age groups by 3% in 2026, following a similar increase last year.

This is how the actuaries at Purpose describe LPF:

“The Longevity Pension Fund is the world’s first investment fund to provide income for life by bundling longevity risks, a concept similar to that used in defined benefit plans and lifetime annuities, to provide lifetime income.”

The goal is for LPF to work alongside annuities for some retirees (see my last column on why annuities aren’t as popular as some think they should be). LPF is not registered as a pension, but it is described as a pension because it is designed to provide income for life, regardless of how long you live. It is offered as a mutual fund rather than an ETF because it is not designed to be traded, Stark said one podcast shortly after launch.

Age is a big variable. For this purpose, two classes of the Fund have been created: an “Accumulation” class for persons under 65 years of age, and a “Deduction” class for persons 65 years of age or older. You can’t buy it once you reach 80. LPF promises monthly payments for life, but the structure is flexible enough to allow for repayments or additional investment in the product – something traditional annuities usually don’t offer. If you switch from the accumulation to the decumulation product at the age of 65, the transfer is free of capital gains tax consequences.

The brochure describes six age cohorts, 1945 to 1947, 1948 to 1950 etc., ending in 1960. The return for the oldest cohort as of September 2025 is 8.81%, falling to 5.81% for the 1960 cohort. My own 1951–1953 cohort has a return of 7.24%.

How is this generated? Apart from the mortality credits, the capital is invested like any broadly diversified Asset Allocation fund. The long-term strategic asset allocation is set at 49% equities, 41% fixed income and 10% alternatives. As of September 30, Purpose lists 38.65% in fixed income, 43.86% in equities, 12.09% in alternatives and 4.59% in cash or equivalents. The geographic breakdown is 54.27% Canada, 30.31% United States, 10.84% ​​international/emerging and the same 4.59% cash. MER for the Class F fund (which has the majority of investors) is 0.60%.

Stark says LPF has raised $18 million since launch, with 500 investors in the accumulation or decumulation class. He also referred me to the recently released one actuarial assessment on LPF.

Longevity Vehicles in the US

While LPF (and previously) Guardian are, as far as I know, the two leading suppliers of longevity products in Canada, different products in the United States are trying to address the same problem in different ways. A few weeks ago I did an overview of the top US offerings by contacting several US and Canadian retirement experts via Featured.com and LinkedIn. The resulting blog includes products such as Vanguard Target Retirement Income Fund, Fidelity Strategic Advisors Core Income Fund, Stone ridge LifeX Longevity Income ETFs and others.

For now, it appears Purpose is alone in this space in Canada, aside from fixed annuities offered by insurance companies. The US market is different because of Variable Annuities with income options.