Pension plan annuity purchase update – Q2 2022

Market activity

Group annuity risk transfer sales ($ millions)

Source: LIMRA Secure Retirement Institute

Pension buyout sales totaled $12.3B in Q2 2022, which represents the highest volume ever recorded in a second quarter and a 148% increase compared to Q2 2021. 221 buyout contracts have been sold through the first half of 2022, a 69% increase from the first six months of 2021. The outlook for the rest of the year remains strong, as is usually the case for the second half of the calendar year, and total annual sales should surpass last year’s $34B.

What we’re seeing

Pension buyout activity remains very active in Q3 after a record setting first half. Some insurers are reaching capacity constraints and declining otherwise attractive deals due to the high volume of cases. Despite this, pricing remains very competitive. For retiree only cases, pricing continues to average 98% of the economic liability[1], while plan termination cases which include in-pay and deferred annuities average approximately 101%[2].

What we’re hearing

Three new insurers are preparing to enter the pension buyout market later this year or by early 2023, which in addition to rising interest rates, will continue to drive competitive pricing for plan sponsors looking to derisk their pension plans. Pension buyouts will remain attractive for the foreseeable future as the market continues to expand.

¹ Measured using FTSE curve and best estimate of underlying mortality.
² Based on plan demographics and the mix of deferred and in-pay annuities.


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