January 2019
Duration: 7 Years 15 Years 7 Years 15 Years
Range Rate: 3.01% – 3.45% 3.37% – 3.55% Average Rate: 3.18% 3.46%

During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased US defined benefit plan funding ratios. As interest rates climbed, plan liabilities dropped which led to a reduction in annuity purchase costs*. However, as interest rates began to drop in January 2019, annuity purchase costs began to increase along with plan liabilities.


Annuity purchase interest rates can be volatile. Although 2018 experienced an upward trend in annuity purchase interest rates, history demonstrates these rates fluctuate over time with varying degrees of peaks and valleys. The evident drop in rates in January 2019 may be the start of a new valley or a temporary deviation from the upward trend experienced in 2018. Sponsors can reduce the impact of this volatility on their balance sheet through Pension Risk Transfer strategies


Although overall annuity purchase pricing trended downward during 2018, significant cost volatility persisted month-to-month. The consistent short-term volatility of annuity pricing makes timing an early entrance to the insurance market a crucial part of the planning stage. By connecting with an annuity search firm early, sponsors can take advantage of favorable fluctuations in a volatile market.


Have a pension risk transfer need but not sure where to start? See our article, What to look for when comparing Annuity Search Firms .

*October Three collects annuity purchase rates for Duration 7 years and Duration 15 years from several insurers on a monthly basis. We have constructed 2 hypothetical annuity plans. Annuity Plan 1 contains retirees only and has a liability duration of 7 years. Annuity Plan 2 contains 70% retirees and 30% deferreds and has a liability duration of 15 years. Using the collected annuity purchase rates and 2 hypothetical annuity plans, we have produced the following graphs representative of actual 2018 Pension Risk Transfer market activity and the corresponding impact on pension plans.

Annuity Purchase Update: 2018 Interest Rates CTA ad

What to Read Next


Top Five Reasons Why the Time is Right to Annuitize

Many companies including International Paper and FedEx, says the Wall Street Journal’s - CFO Journal, are taking advantage of the unique factors making now an ideal time to annuitize. Transferring plan liabilities to insurance companies through an annuity purchase is an effective way to decrease risk and reduce costs, and today’s market is an especially… Read More

友情链: im体育账号_im体育下载安装苹果版_im 体育注册入口 | im体育游戏 IM体育竞猜平台|im体育下载 | im体育app平台下载|im体育在线app首页 - im国际体育客户端 | IM体育软件~im体育 im体育平台_im国际体育app在线下载 | IM体育专家-im体育科技 - im国际体育手机登陆v4.1.27 Android 版 | im体育电竞足球_im体育下载苹果 _ im国际体育真人 | im电竞体育靠谱,im体育在线app官网-im国际体育代理网 |