Milliman Pension Buyout Index Reports Decrease in Pension Transfer Costs

Milliman, Inc., a leading global consulting and actuarial firm, has unveiled its Milliman Pension Buyout Index (MPBI) findings for May. The report highlights a decrease in costs for transferring retiree pension risk to insurers, thanks to a robust competitive bidding process. Notably, the estimated cost dropped by 40 basis points from 100.1% to 99.7% of a plan's accumulated benefit obligation (ABO), marking an advantageous trend for plan sponsors.

Furthermore, the overall expense for annuity purchases by insurers within the index observed a decline of 90 basis points, reducing from 103.4% to 102.5%. This favorable shift suggests potential savings for plan sponsors of about 2.8% in pension risk transfer (PRT) costs by May 31, 2026. Jake Pringle, a Milliman Pension Buyout Index co-author, expressed optimism, noting that the competitive index fell below 100%, reaching a three-year low, which bodes well for increased PRT activities amidst stable interest rates maintained by the Federal Reserve.

The MPBI assesses the differential between the FTSE Above Median AA Curve and annuity purchase interest rates from nine insurers, facilitating the estimation of costs associated with a PRT annuity de-risking strategy. Results for individual plan annuity buyouts may vary due to plan size, complexity, and an evolving competitive landscape. For comprehensive insights, stakeholders are encouraged to reach out via pensionbuyout@milliman.com. Established in 1947, Milliman continues to deliver strategic solutions across diverse sectors.