Pension Buy-Out Product Sales Hit 15-Year High

Sales of single-premium pension buy-out products in the second quarter of 2017 were the highest they have been in a decade and a half, according to a recent report.

The LIMRA Secure Retirement Institute reports that single-premium pension buy-out product sales in the United States in the second quarter amounted to $4.1 billion. Not only was this the highest figure in 15 years, it also was more than three times higher than the figure for the second quarter of 2016. Further, buy-out products’ combined assets came to just under $100 billion, almost 11% higher than their total value in the second quarter of 2016.

LIMRA Secure Retirement Institute Research Analyst Eugene Noble said in a press release that the second quarter figures marked the first time such sales exceeded $4 billion. He added that they continued a trend LIMRA has seen since 2015 of pension buy-out product sales being unusually strong in the second quarter.

LIMRA says it has found that 80% of defined benefit plans are less than 90% funded. This is the case despite recent stock market vigor, says LIMRA, and reflects “years of very low interest rates and past under-funding.”