Milliman’s latest updates to its Milliman Pension Buyout Index (MPBI) shows that during August, the estimated cost to transfer retiree pension risk to an insurer in a competitive bidding process climbed 20 basis points, from 99.7% to 99.9% of a plan’s accounting liabilities (accumulated benefit obligation, or ABO). That means the estimated retiree pension risk transfer (PRT) cost is now 99.9% of a plan’s ABO.
During the same time period, the average annuity purchase cost across all insurers in Milliman’s index inched down by 20 basis points, from 103.1% to 102.9%. The competitive bidding process is estimated to save plan sponsors about 3.0% of PRT costs as of August 31, 2026.
“The MPBI continues bringing good news to plan sponsors wanting to derisk through PRT, with competitive costs landing under 100% for the fourth month in a row,” said Jake Pringle, Co-Author of the MPBI.
“Second quarter results for group annuity sales showed a slowdown in size but an increase in the number of transactions, with small and mid-sized deals taking advantage of these conditions.”
The MPBI compares the FTSE Above Median AA Curve to the annuity purchase composite interest rates from nine insurers to estimate the competitive and average costs of a PRT annuity de-risking strategy.
