Pension Risk Transfer Costs Dip Below 100% in May — Milliman, Inc.

Event summary

Milliman's Pension Buyout Index (MPBI) shows competitive pension risk transfer cost fell from 100.1% to 99.7% of accounting liabilities in May 2026.
Average annuity purchase cost across all insurers dropped by 90 basis points, from 103.4% to 102.5%.
Competitive bidding process estimated to save plan sponsors about 2.8% of PRT costs as of May 31, 2026.
Both competitive and average indices reached three-year lows.

The big picture

The decline in pension risk transfer costs to below 100% marks a significant shift, offering plan sponsors more favorable conditions for de-risking. This trend, coupled with three-year lows in both competitive and average indices, suggests a potential surge in PRT activity as insurers' pipelines fill up. The interplay between steady interest rates and rising inflation adds another layer of complexity to the strategic decisions facing plan sponsors.

What we're watching

Interest Rate Impact: How the Fed's steady interest rates amid rising inflation will affect pension risk transfer costs moving forward.
Insurer Pipeline: The pace at which insurer pipelines fill up and whether this leads to increased PRT project activity in the second half of 2026.
Plan Sponsor Behavior: Whether plan sponsors will capitalize on the current low costs to transfer pension risks more aggressively.