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Aon Retirement and Investment Blog

2018 U.S. Annuity Settlement Market Update

Innovation Drives Market Growth

2017 was a year that saw U.S. pension sponsors and annuity providers continuing to work together in support of record transaction growth, with nearly $25 billion in liabilities settled through pension risk transfer (PRT) transactions. With the transaction pipeline growing each day, marketplace actors (sponsors, advisors, and insurers) should continue to work thoughtfully to maximize transaction capacity.

Insurer price estimation techniques have become increasingly important in terms of supporting initial plan sponsor decision-making. We believe direct insurer price-quoting activities should be appropriately reserved for projects where organizational approval and management support have already been obtained.

As the pace and scale of annuity settlement transaction continue to accelerate, it is important to remember that PRT transactions are complex projects that deliver significant value to the pension plan sponsor. Furthermore, participants who are no longer members of the pension plan are also affected. Pension plan fiduciaries must continue to exercise prudence and diligence in executing these transactions with robust processes that fully consider the best interests of all plan participants.

Aon is proud of its extensive record of supporting U.S. pension risk transfer activity and looks forward to another year of continued market evolution. We have prepared this Market Update to help educate pension sponsors and other pension stakeholders on pension risk transfer strategies.

For more information, please see our full white paper here.

Steve Shepherd is a Partner in our Annuity Settlement Team and is based out of Norwalk, Connecticut.

“Content prepared for U.S. subscribers, but available to interested subscribers of other regions.”

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