Milliman, Inc., a consulting and actuarial firm, has released the latest update from its Milliman Pension Buyout Index (MPBI).
This places the projected retiree pension risk transfer (PRT) cost at 100.1% of the plan’s ABO.
The difference between the lowest annuity purchase rates and the overall average expanded to 4.0%, marking the largest spread in three years. This demonstrates the potential savings that plan sponsors can achieve by leveraging a competitive bidding process.
Meanwhile, the average annuity purchase cost across all insurers tracked in the index rose modestly from 103.9% to 104.1%. As of July 31, 2025, utilising a competitive bidding approach is estimated to lower PRT costs for plan sponsors by around 4.0%.
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The MPBI compares the FTSE Above Median AA Curve with composite annuity rates from nine insurers to estimate both competitive and average costs for a PRT annuity strategy. Actual buyout results may differ depending on plan size, complexity, and market conditions.
“The spread between the most competitive annuity purchase rates and the average hit a 3-year high of 4.0%, highlighting the impact a competitive bidding process can have on PRT costs for plan sponsors,” added Jake Pringle, Milliman Principal and co-author of the MPBI. “Especially since we’ve now seen competitive buyout costs drop for the fourth month in a row.”
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