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Pension Risk Transfers: Sponsors Ready to Act

Author

Keith Golembiewski
Assistant Vice President and Director of Annuity Research
LIMRA and LOMA
KGolembiewski@limra.com

February 2026

The U.S. pension risk transfer (PRT) market is entering a new phase of scale and sophistication. Improved funded status across defined benefit (DB) plans, higher discount rates, and a more competitive insurer landscape are converging to create favorable conditions for sponsors to derisk and offload legacy pension obligations. At the same time, heightened legal scrutiny and evolving regulatory expectations are shaping deal structures and fiduciary processes. The net effect: a market poised for continued expansion, with sponsors increasingly ready and strategically prepared to act.

Moment of Opportunity

Annual U.S. PRT volumes climbed from under $14 billion in 2015 to nearly $52 billion in 2024 (Source: LIMRA), reflecting both macro tailwinds and greater plan sponsor awareness of buyouts, buy-ins, and derisking in general.

U.S. Buyout and Buy-in PRT Sales ($M)

Mouse over the bars to see the buyout and buy-in values. If there is no buy-in value showing for a bar, the value is 0. Filter the data in this chart by clicking on a color in the chart legend.

Source: LIMRA, PRT GART Benchmark

Some industry experts now project the market could exceed $70 – 80 billion annually within the next six to seven years, citing stronger funded status, impacts of rising Pension Benefit Guaranty Corporation (PBGC) premiums, and broader insurer participation.

While 2025 opened with a slower first half — sales in the first and second quarters totaled $7.1 billion and $4.0 billion respectively — the pace accelerated later in the year as sponsors re‑entered the market amid favorable pricing and stable rates. Third quarter sales reached $9.6 billion, down about 32% year-over-year (Source: LIMRA). Milliman’s Pension Buyout Index showed competitive buyout costs hovering near plan accounting liabilities (roughly 100% – 101% of accumulated benefit obligation (ABO) through mid‑to‑late 2025), signaling attractive economics when derisking activities are well timed.

Plan Sponsor Activity

Plan Sponsors are acting now because market volatility and shifting interest rates are creating pressure on balance sheets and opening favorable pricing windows, with 45% citing volatility and 41% citing rate changes as key triggers, according to MetLife research.

Elevated interest rates since 2022 have also strengthened funding levels by lowering liability values and reducing buyout costs. At the same time, a surge in insurer participation — more than doubling over the past decade — has expanded market capacity, increased competition, and improved pricing, even as the industry faces growing scrutiny around longevity assumptions and funded reinsurance practices.

Future Growth

Plan sponsors are showing the willingness and ability to derisk their pension plans. Ninety‑four percent of sponsors with derisking goals plan to fully divest their DB liabilities — most within about five years — and 95% expect to pursue a PRT with an insurer in that time frame. Their preferred approach is clear: 78% favor an annuity buyout (on its own or paired with a lump‑sum window), while lump‑sum‑only strategies appeal to 17%, and buy‑ins remain a niche solution at 4%, as reported by MetLife.

When selecting transaction structures, sponsors are looking to make incremental de-risking progress and tend to prioritize speed and simplicity. According to LIMRA benchmark data, as of third quarter year to date, about one-third of sales were retiree lift‑outs, which offer immediate risk reduction and often favorable pricing. About one-third of sales were full plan terminations via buyout — reflecting a growing strategic focus on fully eliminating legacy pension risk. About one-fourth of sales were buy-ins.

Utilization of buy‑ins are rising in the U.S. as plan sponsors lock in favorable pricing while they finalize terminations and then convert to buyouts when ready. And finally, less than 10% of sales were buyout transactions for both retirees and deferred lives.

Five Key Themes

  1. Strong Funding Ratios and Competitive Pricing Windows
    PRT pricing remains highly attractive, with competitive auctions helping plan sponsors act.  The opportunity is even stronger because higher interest rates since 2022 have lifted funded ratios by reducing the present value of liabilities. As more plans sit at or near full funding, sponsors can move quickly to capture current economic factors, according to Milliman.
  1. Buy‑Ins Are Rapidly Emerging as a Strategic Derisking Tool
    Once only a U.K. phenomenon, buy‑ins are gaining significant traction in the U.S. as sponsors use them to lock in pricing during periods of stable interest rates while working toward full termination readiness. They serve as an increasingly popular “first step” for sponsors wanting to secure economics early, then convert to a buyout once data, funding and administration are finalized.
  1. Strong Market Activity Across All Deal Sizes
    While 2025 saw fewer $1 billion-plus jumbo deals, the PRT market remained active with strong volume across small and mid-sized transactions. This diversification signals that market growth is no longer dependent on a handful of mega deals; instead, it reflects broad‑based demand as more sponsors seek to derisk — supported by ample insurer capacity.
  1. Sponsors Are Evolving Their Operating Models — Including Redeploying Surplus
    Plan sponsors are increasingly using DB plan surplus to fund retiree medical and retiree life benefits, enabled by Secure 2.0’s expanded surplus‑transfer provisions. With 48% planning to leverage surplus for other postretirement programs, PRT is becoming part of a broader financial strategy rather than a standalone pension decision.
    Sources: 2025 Pension Risk Transfer Poll.
  1. Heightened Regulatory and Suitability Scrutiny
    The legal environment continues to test fiduciary rigor under the U.S. Department of Labor’s “safest available annuity” framework, with courts issuing mixed rulings that emphasize the need for transparent, well‑documented processes. In addition, regulatory attention on funded reinsurance — especially offshore structures — is prompting sponsors to more closely evaluate insurer financials and capital, reinsurance partners, and structural protections.

Strong PRT Outlook

Despite episodic slowdowns tied to macro volatility and litigation headlines, tailwind drivers remain intact: elevated funded ratios, competitive pricing, more capable insurers, and clear plan sponsor intent to reduce DB liabilities and risk. With many plan sponsors actively interested in pension risk transfer solutions, the market is positioned for continued growth — potentially exceeding record sales seen in 2024.

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