Pension Buyout Sales High in 1st Quarter

Pension buyout sales in the first quarter of 2020 were the second highest of any quarter, and for good measure estimated retiree buyout costs as a percentage of accounting liability fell in the first month of the second quarter, say recent reports.

 

Single premium buyout sales in the United States in the first quarter amounted to $4.5 billion, says the Secure Retirement Institute, exceeded only by the first quarter of 2019. The first quarter results from 2020 and 2019 are the only times that such sales were above $4 billion. There were no single premium buy-in sales reported in the first quarter, SRI says.

Single premium buy-out assets stood at $153.8 billion in the first quarter, SRI reports, and single premium buy-in assets amounted to $2.8 billion. Combined single premium assets were $156.6 billion in the first quarter.

 

Compared to the first quarter of 2019:

 

 

First Quarter of 2020	Change from First Quarter of 2019
Single  premium buyout sales	—6%
Single  premium buyout assets	+11%
Single  premium buy-in assets	+173%
Combined single premium assets	+12%
Group annuity transfer sales	—8%

 

Overall group annuity transfer sales came to $4.6 billion in the first quarter, SRI says, an 8% drop from the same period one year before. Milliman, in a recent report, says that as the second quarter of 2020 began, annuity purchase rates fell by 51 bps. That, in combination with a 56 bps drop in the average accounting discount rates, resulted in the estimated retiree buyout cost as a percentage of accounting liability falling from 105.7% to 105.5% in April, Milliman reports.