Benefits Canada Two experts weigh in on the merits and drawbacks of taking the traditional annuities route versus opting for the newer do-it-yourself option. Marco Dickner, retirement risk management leader for Willis Towers Watson in Canada Although annuity purchases have become an important pension risk management option over the last decade, a countertrend is emerging for plan sponsors that wish to keep the annuity purchase premium, including associated profit margins, within their plan. How? By applying the same proven and tested recipe that’s been used by insurers. A do-it-yourself annuity strategy has two main objectives. The first one is to insulate the plan from interest rate and cash flow risks — which I’ve seen as a top reason for defined benefit pension plans deficits over the last few decades, through fixed income products (similar to typical liability-driven strategies). The second objective is generating returns in excess of liability growth through sufficient exposure to credit (i.e., corporate bonds, mortgages) and illiquidity premiums (i.e., private debt). This can lead to 50 to 100 basis point spreads.