Pension risk transfer premiums rose slightly in January, a Milliman study said.
The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102.4% as of Jan. 31, up from 101.8% at the end of 2020.
Also, average annuity purchase rates among the most competitive rates rose by 5 basis points. The index for competitive pricing inched up to 99.6% from 99.1% the previous month.
"Rates increased in January, but we're also expecting to see at least one new insurer enter the market in 2021," said Mary Leong, Milliman consulting actuary and the study's co-author, in a news release. "It's too early in the year to see how this will translate to pension risk activity, but given the market expansion over the past two years we may potentially see more competitive pricing moving forward."
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.