Milliman, Inc., a consulting and actuarial firm, has released the latest update from its Milliman Pension Buyout Index (MPBI).

In July, the estimated cost of transferring retiree pension obligations to an insurer through competitive bidding edged down slightly, from 100.2% to 100.1% of a plan’s accumulated benefit obligation (ABO).

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%.

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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