In planning for retirement, worry about longevity rather than dying young

Or, as U.S. 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 blog recently highlighted that quote.  

Retirement is usually about planning for unexpected longevity, often exacerbated by inflation. After all, a 65-year-old Canadian woman can expect to live to 87—but there’s an 11% chance she’ll live to 100. 

That fact was cited by Fraser Stark, President of Longevity Retirement Platform at Toronto-based Purpose Investments Inc., at a September presentation to the Retirement Club, which we described this past summer. Stark’s presentation was compelling enough that I decided to invest a chunk of my recently launched RRIF into the Purpose Longevity Pension Fund (LPF). A version of Stark’s presentation may be available on YouTube, or you can get the highlights from the Purpose brochure.

Stark confirms that LPF, launched in 2021, is currently the only retail mutual fund or ETF offering longevity-protected income in Canada. Note that LPF is not an ETF but a traditional mutual fund. It aims to generate retirement income for life; to do so, it has created what it describes as a “unique longevity risk pooling structure.” 

This reflects what noted finance professor Moshe Milevsky has long described as “tontine thinking.” See my Retired Money column on this from 2022 after Guardian Capital LP announced three new tontine products under the “GuardPath” brand. However, a year ago Guardian closed the funds, so is effectively out of the tontine business. Apparently, it’s a tough slog competing with life annuities.

Here’s the full list of wealth advisors and full-service brokers that offer it. Included are full-service brokerages (and/or their discount brokerage units) of the big banks, including Bank of Montreal, National Bank, and recently Royal Bank on a non-solicited basis. Among many independents offering it are Questrade and Qtrade. In addition, Stark says iA Financial allows investments in LPF on a non-solicited basis.

Mimicking defined benefit pensions

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

LPF deals with the dreaded inflation bugaboo by aiming to gradually raise distribution levels over time. It recently announced it was boosting LPF distributions by 3% for most age cohorts in 2026, following a similar lift last year.

Here’s how Purpose’s actuaries describe LPF:

“The Longevity Pension Fund is the world’s first mutual fund that offers income for life by incorporating longevity risk pooling, a concept similar to that utilized by defined benefit pension plans and lifetime annuities, to provide lifetime income.”

Purpose envisages LPF working 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’s described as one because it’s structured to provide income for life, no matter how long you live. It’s offered as a mutual fund rather than an ETF because it’s not designed to be traded, Stark said in one podcast soon after the launch. 

Age is a big variable. Purpose created two classes of the Fund: an “Accumulation” class for those under age 65, and a “Decumulation” class for those 65 or older. You cannot purchase it once you reach 80. LPF promises monthly payments for life but the structure is flexible enough to allow for either redemptions or additional investments in the product—something traditional life annuities do not usually provide. When moving from the Accumulation to the Decumulation product at age 65, the rollover is free of capital gains tax consequences. 

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

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

Stark says LPF has accumulated $18 million since its launch, with 500 investors in either the Accumulation or Decumulation classes. He also referred me to the recently released actuarial review on LPF. 

Longevity income vehicles in the U.S.

While LPF (and formerly) Guardian are the two main longevity product suppliers in Canada of which I’m aware, several products in the United States attempt to tackle the same problem in different ways. A few weeks ago, I did a roundup of the major U.S. offerings by contacting various U.S. and Canadian retirement experts through Featured.com and LinkedIn. The resulting blog covers products like 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, apart from fixed life annuities offered by insurance companies. The U.S. market is different because of Variable Annuities with income options.