Pension Risk Transfer Solutions for Institutional Investors

This white paper discusses pension risk transfer (PRT) as a strategic solution for institutional investors looking to manage pension liabilities. It outlines the growth of the PRT market, highlighting that sales of group annuity buy-outs reached $41.3 billion in 2023, a significant increase from previous years. The paper details the key drivers behind this trend, including the rising costs and risks associated with defined benefit plans, such as interest rate risk and longevity risk. It emphasizes the benefits of PRT transactions, which allow plan sponsors to transfer pension obligations to life insurers, thereby eliminating associated risks and costs. Additionally, the document provides guidance on selecting an insurer for PRT, noting the importance of due diligence and compliance with fiduciary responsibilities. Factors such as the insurer's financial strength, experience, and ability to administer payments are discussed as critical considerations for plan sponsors and their consultants.