Pension risk transfer premiums fell significantly last month due to a continuous decline in both annuity purchase rates and discount rates. Per the latest pension buyout index study, discount rates sunk 27 basis points this May while annuity purchase rates plummeted 10 basis points. The differences indicates a small decrease in the cost of annuities to 103.9% of plan liability compared to 105.5% of liabilities in April.
“We’ve seen a continuous drop in rates in May; however, the drop in annuity rates isn’t as steep as the decline in discount rates,” stated Mary Leong, during the latest news release. “We may see an uptick in (pension risk transfer) deals for the month given the improvement in retiree buyout costs.”
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