U.S. pension risk transfer costs decrease slightly in June: report
U.S. pension plan sponsors’ derisking costs decreased from 99.7 per cent to 99.6 per cent of accounting liabilities in June, according to a new report by Milliman Inc.
It found the average annuity purchase cost across all insurers increased from 102.5 per cent to 102.6 per cent during the month. As of June 30, the competitive bidding process was estimated to save plan sponsors about three per cent on pension risk transfer buyout costs.
“Competitive buyout costs remained below 100 per cent for the second month in a row, extending the three-year low we saw last month,” said Jake Pringle, a principal at Milliman and co-author of the report, in a press release.
According to the report, the accounting discount rate increased by one basis point in June, while competitive annuity purchase rates increased by three basis points. This two-basis-point difference led to the decrease in the estimated competitive retiree buyout cost as a percentage of accounting liabilities.
Read more @Benefits Canada
