The number of bulk purchase annuity buy-ins in the US pension risk transfer (PRT) market remains small in both absolute and relative terms despite recent signals of interest in these deals.
The strict ERISA requirement for US plan sponsors to select the “safest available annuity provider” when transferring liabilities has also mitigated against other strategies because the standard is best met by the final, permanent nature of a full scheme buy-out.
This nuance is illustrated starkly in industry data. According to LIMRA, in 2024, only 10 buy-in contracts were sold, up from 8 contracts in 2023, and aggregate buy-in premium totaled $3.7bn for the year, down 5% from 2023 and representing just 7% of the $52bn of aggregate premium seen last year.
Although buy-ins don’t offer the same benefit as buy-outs – i.e., a full termination of the pension plan – they can be completed much quicker, and give sponsors the opportunity to lock in the price which can help the corporate CFO by eliminating balance-sheet volatility, providing budget certainty, and removing the costs involved in managing an asset management function.
“It takes the uncertainty off the table,” said Jake Pringle, Principal and Consulting Actuary at consultancy Milliman.
“When you buy-in, you know the price up front before you do any other transactions. You are essentially hiring an insurance company to be your liability-driven investment manager.”
An earlier deterrent to buy-ins was their relatively higher cost at a time when DB schemes were not as well funded as they are now. With the average plan now estimated to be 104.6% funded and armed with the knowledge gained by completing buy-in transactions in recent years, life insurers in the US have a greater appetite for the product.
“The market has done 30 or so of those transactions, if not more, and through those iterations a lot of experience has been gained,” said Alex Gagnon, Head of Distribution at Legal & General Retirement America.
“They’ve worked through some of the kinks and so the product today is more streamlined than it was five years ago, which is also easier to market to sponsors and easier for them to understand.”
The higher funding levels of DB schemes in the US seen in recent years have also likely had an impact on demand for buy-in solutions, as the speed at which they can be completed provides something of a hedge against falling interest rates, a trend that began in the US in August 2024 and resumed in September this year with a 25 basis points cut; other things being equal, higher interest rates mean lower prices, and vice versa.
And whilst buy-ins may not be the holy grail to a US corporate CFO, Gagnon says the time to buy-out is decreasing, so any additional costs of a buy-in transaction – namely, the administration costs that the plan sponsor continues to incur between when the buy-in transaction is completed and when the buy-out gets finalised – are mitigated to a certain extent.
“The new buy-in structures that we have seen in the market do tend to be converted into a buy-out within a year or two from buy-in execution so whatever added costs the buy-in entails vs. the buy-out are only for a short period of time.”
The US pension risk transfer market has pulled back quite significantly this year. Total PRT new premium fell 64% in the second quarter of 2025 to $4.1bn, according to LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey. Through the first half of the year, total PRT sales were $11.5bn, down 56% year over year.
That has impacted on the buy-in market, of course. LIMRA’s survey says that in the first six months of 2025, buy-in sales were $404.8m, down 82%, but US carriers reported five buy-in contracts, equal to the number of contracts sold during the same period in 2024.
PRT data tends to be reported with a lag, however; LIMRA published the aforementioned data towards the end of September but now, with the fourth quarter of 2025 well underway, Gagnon says that, when the year is all said and done, buy-ins could account for their largest proportion of the market to date.
“If you look at the last few years, buy-ins represented something between 5% and 10% of the total premium market. Well, through September, that’s already just under 15%; so, we are seeing a trend upwards,” he said.
“I would be surprised if we didn’t get close to 20 buy-ins this year, which would be double what we’ve seen in the past.”
