The U.S. pension risk transfer market experienced a strong third quarter, with more than $14 billion in estimated volume, according to Legal & General Retirement America.
LGRA’s latest Pension Risk Transfer Monitor said the quarter ended Sept. 30 saw a 35% year-over-year increase over the third quarter of 2023, which saw $10.6 billion in PRT volume.
Nearly half of the third-quarter volume came from a single transaction. International Business Machines Corp., Armonk, N.Y., purchased a group annuity contract from Prudential Insurance Co. of America to transfer $6 billion in defined benefit plan liabilities.
That buyout deal, which closed Sept. 11, transferred the benefit-paying responsibility for about 32,000 retirees and beneficiaries covered by the IBM Personal Pension Plan to Prudential effective Jan. 1.
LGRA said the expected volume for 2024 is more than $50 billion, greater than the $45.8 billion in volume seen in 2023 and on par with the record-breaking total of $51.9 billion in 2022.
The Pension Risk Transfer Monitor cited pension funding surpluses as a primary driver for the continued escalation of pension buyout activity. As of Sept. 30, LGRA estimated the average funding ratio for U.S. corporate pension plans was 110%.
