U.S. pension risk transfer premiums among the most competitive bidding processes rose in October to nearly 102%, a study by actuarial and consulting firm Milliman showed.
The estimated average premium among the most competitive rates was 101.9% as of Oct. 31, up from 101.1% as of Sept. 30, according to a report about the Milliman Pension Buyout index.
Also during October, the average annuity purchase cost across all insurers increased to 104.4% from 103.5% a month earlier.
"Even with interest rates climbing again during October, retiree buyout costs fell short, rising to their highest levels in over three years," said Jake Pringle, a principal and consulting actuary with Milliman and co-author of the study, in a Nov. 17 news release. "Several insurers have reached capacity for 2023, so those plan sponsors with PRT on their agenda may see less competition and potentially higher pricing to close out the year."
Average accounting discount rates increased by 35 basis points in October, and annuity purchase rates increased by 24 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.