Estimated average pension risk transfer premiums fell in July, both overall and among the most competitive bidding processes, a Milliman study showed.
The estimated buyout cost as a percentage of accounting liabilities, or accumulated benefit obligations, was 101.5% as of July 31, down from 103% a month earlier, according to the Milliman Pension Buyout index.
Also, the average of the most competitive annuity purchase rates fell by 30 basis points to 98% from 98.3% a month earlier. It is the second month in a row the most competitive rates fell, according to the study. As of May 31, the most competitive rate was 98.6%.
Mary Leong, principal and consulting actuary with Milliman and co-author of the study, said in a news release Monday that the overall estimated buyout cost of 101.5% is lowest yet recorded by the actuarial and consulting firm.
"Historically, 65% to 75% of single premium sales (buy-ins and buyouts) occur in the second half of the year, so it will be interesting to see how sales look as 2022 rolls on," Ms. Leong said in the news release.
Average accounting discount rates during the month of July dropped by 39 basis points from the previous month, while annuity purchase rates increased by 36 basis points for the most competitive rates, according to the study.
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.
