Employers shifted about $7.1 billion of pension liabilities to insurers in the first quarter of 2025 — nearly $7 billion of that in single‑premium buyouts — a flow that is concentrating risk with a small number of carriers and creating fresh pricing, legal and procedural strains, LIMRA’s quarterly survey shows. The sales covered almost 100,000 participants across 127 contracts, and retiree‑only carveouts made up roughly 57% of transactions, underscoring that much of the market’s movement is coming from smaller, targeted deals rather than full plan terminations.

Deal flow and the numbers

LIMRA’s U.S. Group Annuity Risk Transfer Sales Survey puts first‑quarter new premium at $7.1 billion, covering almost 100,000 pension participants across 127 contracts. That’s down from the record first quarter of 2024 on a sales basis but up about 10% from 2023, the trade group reported. Single‑premium buy‑out sales accounted for roughly $7 billion of the quarter’s total; LIMRA said single‑premium buy‑out assets were higher at quarter end, up year over year.

The mechanics are straightforward: a group annuity risk transfer — commonly called a pension buy‑out — lets an employer hand its pension liabilities to an insurer in exchange for a single premium. The employer removes that liability from its balance sheet and takes volatility off its funded status. LIMRA’s data show the majority of Q1 transactions — about 57% — were retiree‑only carveouts rather than full plan transfers.

Those retiree carveouts tend to be smaller and more numerous than full terminations. Still, the dollar totals are driven by a handful of larger deals. Mercer’s April update underlines that point: Mercer estimates the PRT market shifted significant premiums to insurers across 2024 and says partial buyouts and jumbo transactions now make up a large share of market volume.

Where the growth is coming from

Plan sponsors have several motives for moving liabilities off their books. Corporations facing volatile markets and higher discount rates have an incentive to lock in benefits and rehabilitate balance sheets.

“Although larger plan deals fluctuate quarter to quarter, smaller and mid‑sized plan sponsor interest in PRT solutions remained strong in the first quarter,” said Keith Golembiewski, assistant vice‑president and head of LIMRA Annuity Research. “Our data shows the majority of first quarter sales (57%) were retiree‑only carveouts.”

Where the strain shows

The expanding market has benefits: employers can de‑risk and insurers get profitable annuity premiums. But there are limits and friction points. LIMRA cautioned that heightened economic uncertainty could damp growth in the PRT market at times, even while it expects expanded market capacity and sponsor demand to support strong sales through 2025.

  • Pricing volatility: Large buyout pricing can swing with interest rates and asset markets.
  • Procedural and legal pressure: Mercer flags a more rigorous fiduciary framework and legal challenges over insurer selection, which can slow timetables and add costs as fiduciaries must justify carrier choices.
  • Concentration risk: Large transactions can concentrate liabilities with a relatively small number of insurers, raising oversight concerns for sponsors and regulators.

As liabilities flow to insurers, these pressures — pricing volatility, procedural scrutiny and concentration risk — are creating strains for insurers, plan sponsors and the legal framework that governs deal execution.

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Keith Golembiewski, LIMRA’s assistant vice‑president and head of annuity research, noted retiree‑only carveouts accounted for 57% of first‑quarter sales — a concrete sign that the market’s momentum is being driven more by carveouts than by large plan terminations.

This article was created with AI assistance.