The finances of pension plans have improved, and pension buy-out sales have increased — trends both fueled by stock market performance and interest rates, according to two reports.
Pension plan finances improved “modestly” in May, reports October Three Consulting, LLC, a result it attributes to higher interest rates and higher stock prices. The firm tracks model pension plans to gauge pension plans’ performance and factors affecting such plans.
While October Three noted improvement in May, it also said that result stands in contrast to the first quarter. Due to the poorer performance in the first four months of 2016, it says, the performance of the plans they track are down overall for the year so far.
That market volatility is also part of the explanation for an increase in group pension buy-out sales, according to the Life Insurance and Market Research Association Secure Retirement Institute (LIMRA SRI) in its more recent quarterly Group Annuity Risk Transfer Survey. LIMRA says those sales amounted to nearly $1.1 billion in the first quarter.
LIMRA SRI says that low interest rates and increasing Pension Benefit Guaranty Corporation premiums for years have brought about greater group pension buy-out sales. LIMRA says that buy-outs in the first quarter of this year were 21% higher than those of the same period in 2015, something it calls “noteworthy” since it has found that such sales are usually high in the fourth quarter and drop in the first quarter. The results for the first quarter of 2016 are due to market volatility and PBGC premium hikes, LIMRA SRI says its analysis suggests.
Pension plan finances improved “modestly” in May, reports October Three Consulting, LLC, a result it attributes to higher interest rates and higher stock prices. The firm tracks model pension plans to gauge pension plans’ performance and factors affecting such plans.
While October Three noted improvement in May, it also said that result stands in contrast to the first quarter. Due to the poorer performance in the first four months of 2016, it says, the performance of the plans they track are down overall for the year so far.
That market volatility is also part of the explanation for an increase in group pension buy-out sales, according to the Life Insurance and Market Research Association Secure Retirement Institute (LIMRA SRI) in its more recent quarterly Group Annuity Risk Transfer Survey. LIMRA says those sales amounted to nearly $1.1 billion in the first quarter.
LIMRA SRI says that low interest rates and increasing Pension Benefit Guaranty Corporation premiums for years have brought about greater group pension buy-out sales. LIMRA says that buy-outs in the first quarter of this year were 21% higher than those of the same period in 2015, something it calls “noteworthy” since it has found that such sales are usually high in the fourth quarter and drop in the first quarter. The results for the first quarter of 2016 are due to market volatility and PBGC premium hikes, LIMRA SRI says its analysis suggests.
- Log in to post comments