Pension Plan Annuity Purchase Update – Q3 2022

Market Activity

Source: LIMRA Secure Retirement Institute

Pension buyout sales totaled a record $26.1B in Q3 2022, which represents the highest volume ever recorded in a single quarter and brings the year-to-date 2022 sales to $41.1B. This breaks the annual record of $36B set in 2012 with three months still remaining to add to the 2022 total, which is expected to surpass $50B. Third quarter sales were led by the second largest US pension buyout in history. International Business Machines Corp. purchased group annuity contracts from Prudential and MetLife, settling $16B in liabilities. While jumbo deals drove the record amount, volume remained high, as 145 buyout contracts were sold in the third quarter, which was a 23% increase over Q3 2021 and brought the total contracts sold in 2022 to 362.

What We’re Seeing

Following the historical third quarter, pension buyout activity remained very active in October and November, with deals finally slowing down in December and some insurers declining otherwise attractive deals after hitting their annual PRT sales targets. Despite this, pricing remains very competitive. For retiree only cases, pricing continues to average 99% of the economic liability[1], while plan termination cases which include in-pay and deferred annuities average approximately 101%[2].

What We’re Hearing

Pension buyouts should remain very popular in 2023 due to high interest rates making annuity contracts more attractive. In addition, many plan sponsors terminating their pension plans have worked with their actuaries and consultants to time their terminations to avoid the busy second half of the calendar year and will complete their buyouts in early 2023, which will provide a strong start to 2023 sales.

Finally, we expect several new insurers to enter the market in early 2023. The additional competition will continue to drive attractive pricing for plan sponsors looking to derisk their pension plans.


[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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