Milliman’s Latest Pension Buyout Index Report
Milliman, Inc., a leading global consulting and actuarial firm, has unveiled the most recent insights from its Milliman Pension Buyout Index (MPBI). In January, the estimated expense to transfer retiree pension obligations to an insurer through a competitive bidding process experienced a slight increase, rising from 101.4% to 101.6% of a plan’s accounting liabilities, also known as the accumulated benefit obligation (ABO). This change indicates a modest rise in the projected retiree pension risk transfer (PRT) costs.
“The PRT market is experiencing a dynamic start in 2025,” noted Jake Pringle, a principal at Milliman and co-author of the MPBI. “We’ve observed exceptionally competitive transactions this year, where the bidding process has resulted in buyout costs that are even lower than our competitive MPBI rate.”
During this same time frame, the average annuity purchase cost across all insurers included in the index also saw an increase, moving from 104.0% to 104.3% of a plan’s ABO. The competitive bidding process continues to deliver cost advantages for plan sponsors, boasting an estimated reduction of 2.7% in PRT costs as of January 31.
The MPBI relies on the FTSE Above Median AA Curve and integrates annuity purchase composite interest rates from nine insurers to calculate both competitive and average PRT costs. It is important to note that actual annuity buyout expenses may vary, influenced by factors such as plan size, complexity, and prevailing market conditions.
