U.S. pension risk transfer premiums remained steady in November, a study by actuarial and consulting firm Milliman showed.
The estimated average premium among the most competitive rates was 101.2% as of Nov. 30, the same as a month earlier, according to the Milliman Pension Buyout index.
Milliman said the competitive rates remained the same because average accounting discount rates dropped by 10 basis points, while annuity purchase also dropped by 10 basis points for the most competitive rates in November.
Competitive rates remain just above the level seen at the end of 2023, when the estimated average premium was 100.5%.
“Third-quarter reporting shows pension risk transfers came in at $14.2 billion — a 36% increase over 2023 — bringing the total for the year to almost $40 billion,” said Jake Pringle, a principal and consulting actuary with Milliman and co-author of the study, in a news release. “Plan sponsors may have pushed to complete their PRT projects before Q4 2024, given the insurer capacity issues we saw at the end of 2023.”
Also as of Nov. 30, the average annuity purchase cost across all insurers also remained steady at 103.9%, the same as the previous month.
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.
