Milliman’s latest Milliman Pension Buyout Index (MPBI) shows that during December 2024, the estimated cost to transfer retiree pension risk to an insurer in a competitive bidding process increased from 101.2% to 101.4% of a plan’s accounting liabilities (accumulated benefit obligation, or ABO).
That means the estimated retiree pension risk transfer cost is now 101.4% of a plan’s ABO. During the same time period, the average annuity purchase cost across all insurers in the MPBI also increased, from 103.9% to 104.0%. The competitive bidding process is estimated to save plan sponsors about 2.6% of PRT costs as of December 31.
“Retiree buyout costs open 2025 with little change from where we ended 2024, as increases in annuity purchase rates matched the movement in accounting discount rates,” said Jake Pringle, Milliman principal and co-author of the MPBI.
“After a quiet 4th quarter, the pipeline for January and February PRT deals is very active. With a new year and a new entrant into the space, insurer capacity is at full strength, which is good news for plan sponsors looking to de-risk through PRT.”