Retirement Plan News

The Pension Risk Transfer market continues to evolve, supported by active insurer participation, increased industry awareness of de-risking strategies and supportive economic environments. The combination of this evolution and favorable conditions persist, the sooner a plan sponsor enters the marketplace, the greater the opportunity to leverage attractive prices and interest rate dynamics.

Both annuity purchase interest rates declined by an average of 16 basis points entering the month of March. As a result, plan sponsors experienced some pressure on pension funding levels, as lower interest rates increased liabilities. Since the start of the month, the 10-year and 30-year Treasury rates, which closely correlate with annuity purchase rates, have shown some upward movement, suggesting this decline could be temporary. With many pension plans still in a healthy funded position and interest rates remaining above historical averages, plan sponsors have an opportunity to stay proactive. As we move into the second quarter of 2026, insurer participation and pricing remain competitive, presenting plan sponsors with an ideal window to explore de-risking strategies and manage pension risk effectively.

Pension liabilities are the present value of the retirement benefits a defined benefit pension plan has promised to pay its employees. In other words, if we think of a pension plan as a debt that sponsors have promised to pay, then the value of that debt can be seen as the pension liability.

The Pension Risk Transfer marketplace gained strength in the fourth quarter of 2025, and that momentum has poured over into 2026. With market conditions remaining both favorable and stable, plan sponsors should engage with an annuity search firm early to effectively monitor developments in the market and capitalize on de-risking opportunities.

• The average Annuity Purchase Interest rates jumped this past month, with the average duration 7 rate at 4.24% and average duration 15 rate at 4.25%.

• The average Annuity Purchase Interest rates jumped again this past month, with the average duration 7 rate at 4.04% and average duration 15 at 4.05%. **

• The average Annuity Purchase Interest rates continue to climb, with the average duration 7 rate at 3.82% and average duration 15 rate at 3.87%.

• The average Annuity Purchase Interest rates are the highest we have observed, with the average duration 7 rate at 3.75% and average duration 15 rate at 3.76%.

The Pension Risk Transfer (PRT) market in 2025 demonstrated remarkable resilience. While sales volumes stabilized below the record-breaking highs of 2024, the competitive landscape significantly matured. According to LIMRA, the entry of new carriers has expanded market capacity, broadening access for small and mid-sized plan sponsors and is expected to support PRT activity in future years. Similar to 2024, market conditions in 2025 proved unpredictable, reinforcing the importance of proactive planning and timely execution of de-risking strategies.

Overall premium volume and transaction activity in the pension risk transfer market during the first half of 2025 was lower compared to the unprecedented levels recorded in 2023 and 2024. This deceleration was driven in part by a reduction in jumbo transactions, which had previously higher premium totals and contributed to the record-breaking figures seen in earlier years. Despite this relative slowdown and despite the Federal Reserve’s ongoing rate-cute cycle, including its most recent reduction this month, the PRT market continued to perform strongly. Favorable plan funding levels, attractive interest rates, and sustained market enthusiasm supported continued robust activity. Conditions in 2025 have also strengthened the expectations that the market’s positive trajectory will carry into the new year.

As we conclude 2025, the landscape for annuity purchase interest rates has remained relatively stable, with minimal fluctuations observed during these final months of the year. Amid the Federal Reserve’s 25 basis-point rate cut at the end of October as well as the recent government shutdown, activity in the PRT marketplace has surged with plan sponsors rushing to complete transfers before year-end. Though it may be too late to transact in 2025, plan sponsors should proactively connect with annuity search firm to position their plans in an advantageous position to secure timely and optimal de-risking options as market opportunities arise in 2026.

Annuity purchase interest rates experienced a notable decline from September to October. While the marketplace exhibits volatility, plan sponsors should maintain motivation to de-risk. Powerful equity market returns are mitigating recent headwinds, offering a critical window of opportunity to lock in at what could be the best prices for the remainder of the year. With insurers under pressure to meet 2025 targets after a slow first three quarters, Q4 pricing has become increasingly competitive—giving Plan Sponsors a timely opportunity to lock in attractive rates.

To gain additional insight into PRT activities, October Three surveyed insurance companies that participate in the market to gauge the level and type of business they experienced in the first half of 2025. 

Recent news strongly suggests the Federal Reserve will cut interest rates before year-end. In turn, several shifts may occur in the global economy, leading to a decline in corporate bond rates. Annuity purchases are likely to be affected by this shift, as insurance carriers rely heavily on corporate bonds when pricing annuities. A reduction in interest rates increases liabilities which leads to higher annuity prices. While the magnitude of these changes is uncertain, there is a reasonable likelihood that annuity purchase interest rates will begin to decline as the rate cuts take effect.

Moving into the second half of 2025, rates are still showing stability and remain in a favorable position. With the recent news of the tariff extension now in effect through August 1, 2025, plan sponsors have a renewed window of opportunity to implement de-risking strategies in a relatively stable market environment.

Annuity rates are up nearly 20 basis points since the beginning of the year corresponding to a downward trend in annuity pricing, creating a favorable de-risking environment amid improved plan funding. With the 90-day tariff extension closing soon, plan sponsors should act quickly before volatility returns.

We’ve seen a modest increase in annuity purchase interest rates as we progress through the second quarter of 2025. In light of recent market volatility and ongoing uncertainty, this upward movement is a positive development for the Pension Risk Transfer (PRT) marketplace.