Sales on pension de-risking deals totaled $14.4 billion in 2015, a 54 percent increase from the previous year, according to LIMRA's Secure Retirement Institute's U.S. Quarterly Group Annuity Risk Transfer Survey.
While five deals transferring at least $1 billion in pension obligations were inked in 2015, the year was marked by the prevalence smaller deals.
More than 300 deals were made for less than $100 million in pension transfers, according to LIMRA.
Recommended For You
"In prior years, significant market growth was a result of one or two jumbo-deals, like the deal between Prudential and General Motors in 2012," said Michael Ericson, LIMRA Secure Retirement Institute analyst, in a statement.
"This year we saw broad growth across the industry and many of the sales came from smaller plans," added Ericson.
Fourth quarter single premium buyout sales, which are distinct from lump-sum offerings, were $5.6 billion. The second, third and fourth quarters each had at least $3 billion sales in 2015, the first year in which three consecutive quarters posted more than that threshold.
Single premium buy-out sales accounted for 95 percent of the total de-risking market, at $13.6 billion last year, a 61 percent increase from 2014.
It was only the second year in which single premium buy-out sales eclipsed $10 billion.
Two jumbo deals in 2012 made that the record year for the pension risk transfer business, when General Motors offloaded $26 billion in liabilities, and Verizon $7.5 billion, both in deals with Prudential.
By most estimates, pension risk transfers represent a growth market for the foreseeable future.
The private sector has about $3 trillion in pension promises. To date, only about 5 percent have been de-risked.
Wayne Daniel, head of U.S. pensions at MetLife, which manages about $38 billion in de-risked liabilities, recently told BenefitsPro that he expects the market to grow for decades.
"We don't expect all of that to come to the market immediately—that would create a bottle neck. But we do see total sales hitting as much as $11 billion this year. Five to $10 billion a year in industry sales would mark a sustainable level of growth going forward," said Daniel.
Last October, Congress authorized more per-participant premium rate increases sponsors will have to pay to the Pension Benefit Guaranty Corp.
In 2015 that rate was $57 per participant. It will go to $64 this year, and incrementally increase to $78 by 2019.
That increased cost, coupled with sponsors' annual volatility in pension contributions, will encourage more de-risking deals, say experts, including Limra.
"With PBGC premium increases, market volatility and continued low interest rates, employers are becoming more interested in transferring their pension risk to an insurer, said Ericson. "The Institute expects this trend to accelerate in the next few years."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
