Pension risk transfer premiums rose in June, according to a study by Milliman.
According to the report, the estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102.4% as of June 30, up from 102% as of May 31.
Meanwhile, the average annuity purchase rates among the most competitive rates rose by 30 basis points. The index for competitive pricing went up to 100% from 99.7% the previous month.
"First-quarter pension risk transfer activity had a slow start in 2021 compared to 2019 and 2020, but with scheduled plan terminations on the horizon and an increased interest in retiree buyouts, activity is expected to increase," said Mary Leong, a consulting actuary with Milliman and co-author of the study, in a news release. "Plan sponsors may also be weighing the impact of the American Rescue Plan Act on their pension plans before making decisions to derisk."
Average accounting discount rates decreased by 16 basis points during June, while annuity purchase rates decreased by 20 basis points on average and 19 basis points for the most competitive rates, according to the report.
The Milliman Pension Buyout index uses the FTSE Above Median AA Curve and insurers' composite interest rates to estimate the average cost of PRT transactions.
