U.S. pension risk transfer premiums among the most competitive bidding processes fell slightly in November, a study by actuarial and consulting firm Milliman showed.
The estimated average premium among the most competitive rates was 101.8% as of Nov. 30, down from 101.9% as of Oct. 31, according to a report about the Milliman Pension Buyout index.
Also during November, the average annuity purchase cost across all insurers dropped to 103.9% from 104.4% a month earlier.
"Even with significant interest rate declines in November, the competitive retiree buyout cost remains steady above 100%," said Jake Pringle, a principal and consulting actuary with Milliman and co-author of the study, in a Dec. 20 news release. "Insurers have either hit capacity or become more selective about which PRT opportunities they pursue, which is likely creating a less competitive market for retiree buyouts as we wrap up 2023."
Average accounting discount rates decreased by 64 basis points in November, and annuity purchase rates dropped by 62 basis points for the most competitive rates, according to Milliman.
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.
