Milliman buyout index puts competitive retiree cost at 99.7% for July

"The Milliman Pension Buyout Index continues to indicate favorable results for plan sponsors considering pension risk transfer, with competitive costs landing under 100% for the third month in a row in July", said Jake Pringle, co-author of the MPBI.

The July rise reverses the prior month’s move, when the estimated competitive retiree buyout cost decreased by 10 bps from 99.7% to 99.6% during June. Announcing that June reading, Pringle said competitive buyout costs had "remained below 100% for the second month in a row, extending the three-year low we saw last month". The same release reported that a new insurer had announced entry into the PRT space, the 24th in the group annuity market.

The MPBI uses the FTSE Above Median AA Curve and annuity purchase composite interest rates from nine insurance companies to estimate the cost, as a percentage of accounting liability, of transferring retiree pension obligations to an insurer. The ratio will be different for plans that use other methods to develop their discount rates.

Sources: milliman.com · milliman.com · businesswire.com