US. Pension risk transfer premiums ease in May
admin2021-06-28T14:48:48+00:00Pension risk transfer premiums fell slightly in May, a Milliman study said.
The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102% as of May 31, down from 102.4% at the end of April.
The cost has fluctuated between 101.8% and 102.7% since the beginning of 2021.
“As expected, first quarter 2021 pension risk activity was down, but historically each progressing quarter sees an increase in activity,” said Mary Leong, Milliman consulting actuary and the study’s co-author, in a news release. “As Q2 gets underway with better funded positions and competitive buyout pricing, plan sponsors may look for opportunities to de-risk or even terminate their plans in the near future.”
Also, average annuity purchase rates among the most competitive rates fell by 4 basis points. The index for competitive pricing decreased to 99.7% from 100.1% the previous month.
Average accounting discount rates dropped by 5 basis points during May, and annuity purchase rates decreased by 1 basis point on average and for the most competitive rates, according to the report.
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