Pension Risk Transfer Insights: Milliman's Latest MPBI Update

Milliman, Inc., a global leader in consulting and actuarial services, recently updated its Milliman Pension Buyout Index (MPBI) with significant insights for the insurance industry's pension risk transfer (PRT) strategies. According to the latest data, the cost to convert retiree pension obligations into an insurance contract through competitive bidding maintained stability at 100.1% of a pension plan's accumulated benefit obligation (ABO) in November. This stability suggests that the cost aligns closely with the liabilities recorded by the plan, underscoring regulatory compliance requirements in managing underwriting risks.

Meanwhile, the average cost for purchasing annuities through insurers within the index stayed at 103.3%, emphasizing savings for plan sponsors. It highlights a potential 3.2% cost reduction via competitive bidding by November 30, 2025. The MPBI employs the FTSE Above Median AA Curve and composite annuity purchase interest rates from nine insurers to provide an assessment that accounts for risk management and regulatory variables in PRT costs.

During the third quarter, PRT transactions achieved $10.6 billion in sales, marking an uptick in activity, especially among smaller and mid-sized pension contract buy-outs. This trend points to increasing engagements in the carrier and provider sectors of the insurance industry. Stakeholders interested in more detailed insights on pension buyout analysis from Milliman are encouraged to reach out through the firm’s established communication channels to navigate industry-specific compliance and claims strategies effectively.