Milliman, Inc., a global consulting and actuarial firm, has published the latest findings from its Milliman Pension Buyout Index (MPBI).
In January, the estimated cost to transfer retiree pension obligations to an insurer through a competitive bidding process rose from 101.4% to 101.6% of a plan’s accounting liabilities (accumulated benefit obligation, or ABO). This increase reflects a slight uptick in the estimated retiree pension risk transfer (PRT) cost.
“The PRT market is off to a hot start in 2025,” said Jake Pringle, Milliman principal and co-author of the MPBI. “In fact, so far this year we’ve seen some hyper-competitive transactions where the bidding process results in a buyout cost that is even lower than our competitive MPBI rate.”
During the same period, the average annuity purchase cost across all insurers in the index also rose, moving from 104.0% to 104.3% of a plan’s ABO. The competitive bidding process continues to offer cost savings for plan sponsors, with an estimated reduction of 2.7% in PRT costs as of January 31.
The MPBI is based on the FTSE Above Median AA Curve and incorporates annuity purchase composite interest rates from nine insurers to estimate both competitive and average PRT costs. Actual annuity buyout costs may vary depending on factors such as plan size, complexity, and market conditions.
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