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Milliman analysis: Competitive pricing rate for pension risk transfer costs drops to 99 1% in December, setting another record low

Share this article Share this article SEATTLE, Jan. 28, 2021 /PRNewswire/ Milliman, Inc., a premier global consulting and actuarial firm, today announced the latest results of its Milliman Pension Buyout Index (MPBI). As the Pension Risk Transfer (PRT) market continues to grow, it has become increasingly important to monitor the annuity market for plan sponsors that are considering transferring retiree pension obligations to an insurer. During December, the average estimated cost to transfer retiree pension risk to an insurer remained flat, at 101.8% of a plan s total liabilities. This means the average estimated retiree PRT cost for the month is now 1.8% more than those plans retiree accumulated benefit obligation (ABO). Annuity purchase costs reflecting competition amongst insurers once again hit a record-low, dropping from 99.4% in November to 99.1% in December. This is the second time competitive rates have dipped below 100% since Milliman began tracking the MPBI.

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Milliman: November sees decline in PRT premiums

Getty Images Pension risk transfer premiums fell in November due to decreases in both discount rates and annuity purchase rates, a Milliman study said. The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) dropped to 101.8% as of Nov. 30, from 102.9% a month earlier. The change was the result of average annuity purchase rates decreasing by 9 basis points, according to Milliman s latest pension buyout index study. Average accounting discount rates dropped 20 basis points in November. Average annuity purchase rates among the most competitive rates, meanwhile, fell by 11 basis points. The index for competitive pricing dropped to 99.4% from 100.3% the previous month.

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Milliman analysis: Competitive pricing rate for pension risk transfer costs drops to 99 4% in November, setting record MPBI low

Milliman analysis: Competitive pricing rate for pension risk transfer costs drops to 99 4% in November, setting record MPBI low
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