US. Pension risk transfer premiums rise in April — Milliman

U.S. pension risk transfer premiums among the most competitive bidding processes rose in April, a study by actuarial and consulting firm Milliman showed.

The estimated average premium among the most competitive rates was 100.9% as of April 30, up from 100.3% a month earlier, according to a report about the Milliman Pension Buyout index.

Milliman said the jump in competitive rates came from average accounting discount rates that increased by 45 basis points, while annuity purchase rates increased by 36 basis points for the most competitive rates in April.

It is the third out of four months this year that the competitive rate has seen an increase. The estimated average premium among the most competitive rates was 100.5% at the end of 2023.

“With interest rates at their highest levels so far in 2024, plan sponsors with projects in the works could be optimistic about competitive pricing for their pension risk transfers,” said Jake Pringle, a principal and consulting actuary with Milliman and co-author of the study, in a May 22 news release.

Also during April, the average annuity purchase cost across all insurers jumped to 103.3% as of April 30 from 102.6% as of March 31.

The Milliman Pension Buyout index uses the FTSE Above Median AA Curve and insurers’ composite interest rates to estimate the average cost of pension risk transfer transactions.

 

 

 

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