Pension risk transfer premiums fell slightly in February, a Milliman study said.
The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102.1% as of Feb. 28, down from 102.4% at the end of January.
Also, average annuity purchase rates among the most competitive rates dropped by 3 basis points. The index for competitive pricing inched down to 99.3% from 99.6% the previous month.
"Rates continued to trend up in February, increasing slightly more for annuity purchase than accounting, which led to a drop in retiree buyout cost," said Mary Leong, Milliman consulting actuary and the study's co-author, in a news release. "Historically, the first quarter has seen less pension risk transfer activity for insurers, but with the strong finish to 2020, plan sponsors may be looking for opportunities to transact earlier in 2021."
Average accounting discount rates increased by 27 basis points during February, while annuity purchase rates increased by 29 basis points on average and 30 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.
