Mercer US pension buyout index 

February 13, 2026

The Pension Risk Transfer market closed another strong year, with $49B¹ of premium transferred from defined benefit plans to insurers. As we reflect on 2025 - the 4th year in a row with premium transfer exceeding 45B - a unique dynamic stands out: the year started slow with only $11B transferred in the first half of the year, but activity ramped up with the largest fourth quarter in a decade. The market was dominated by plan termination related activities, not surprising given the improved funded status of pension plans. Buy-ins and plan termination buyouts represented about 70% of premiums transferred. Look out for our upcoming Pension Risk Transfer Market Update report for an in-depth review of 2025 and trends to expect for 2026 and beyond.

The Mercer US Pension Buyout Index (the “Index”) is designed to track the relationship between the accounting liability for retirees of a hypothetical defined benefit pension plan and two cost measures: the estimated cost of transferring the pension liabilities to an insurance company (i.e., a buyout) and the approximate total economic cost of retaining the pension obligations on the balance sheet. The difference between these measures represents the potential cost savings that plan sponsors can help achieve through a retiree buyout. Note that cost savings cannot be guaranteed.

To discuss your plan’s unique circumstances, you can contact the Mercer team at AnnuityMailbox@mercer.com.

At the end of December, a hypothetical retiree buyout could cost 6.2% less than the economic cost of maintaining the liability for this sample plan.

_{¹ Based on the Mercer Insurer Pension Risk Transfer Sales Survey 12/31/2025}

_{Charts are as of December 31, 2025, and are shown for illustrative purposes only. There is no guarantee that this objective will be achieved. © 2026 Marsh. All rights reserved}

• The hypothetical cost of purchasing annuities from an insurer was 98.4% of the buyout index accounting liability, while the economic cost of maintaining the plan was 104.6% of the accounting liability. The economic cost reflects increasing future Pension Benefit Guaranty Corporation (PBGC) premiums, administrative costs, and investment expenses, which increase the economic cost of maintaining the liability.
• Transactions can be structured to focus on small benefit retirees to help generate even larger potential economic savings. Fixed per person maintenance costs are a larger proportion of their liability. In addition, insurers prefer these participants and often price them more aggressively.
• A plan sponsor's PBO basis, including accounting standard, mortality assumption, and discount rate methodology may impact the attractiveness of insurer pricing compared to plan's ongoing PBO.

• Buyout index liability discount rate increased by 6 basis points over the quarter, while the Buyout index annuity discount rate increased by 24 basis points, causing the hypothetical annuity price to decrease more than the accounting liability over the quarter.
• Beginning in Q4 2025, the index expanded to include rates provided by six additional insurers, reflecting the growing insurer market.
• Mercer continues to monitor the PRT market dynamics in the current economic environment to ensure optimal transaction approach.  If you would like to discuss any aspects of a PRT transaction, please contact one of our annuity specialists.

Published quarterly, the Index allows plan sponsors to see at a glance the relative cost of a buyout by an insurer of retiree liabilities of a defined benefit plan, and how that cost changes over time. It is based on a hypothetical retiree population with duration of 9 years and accounting liability of $100 million, using the Mercer Yield Curve to value the accounting liability. In addition, the Index shows the approximate long-term economic cost of retaining the retiree liabilities on a plan sponsor’s balance sheet. This economic cost includes an allowance for future retention costs (administrative, PBGC premiums and investment expenses). These additional costs are not included in the accounting liabilities held by plan sponsors, but do represent future costs that should be reflected in any risk transfer comparison and evaluation. These costs will vary depending on the specifics of each plan. Based on this evaluation, sponsors can compare the approximate current cost of risk transfer through an annuity purchase with the total cost of retaining obligations on the balance sheet. The Index also illustrates the variability of the buyout cost compared to the balance sheet liability over time. The ability to frequently monitor insurer pricing against pre-determined thresholds, and to be prepared for nimble execution, can help capitalize on varying market and insurer conditions.

Annuity pricing data from a number of US life insurance companies are used to compile the Index. These insurers include American General Life Insurance Co., American National Insurance Co., Athene Annuity & Life Co., American United Life Insurance Company, Banner Life Insurance Co., Fidelity & Guaranty Life Insurance Co., Massachusetts Mutual Life Insurance Co. (MassMutual), Metropolitan Tower Life Insurance Co., Midland National Life Insurance Co., Minnesota Life Insurance Co., New York Life Insurance Co., Principal Life Insurance Co., Pacific Life Insurance Co., Prudential Insurance Co. of America and United of Omaha Life Insurance Co. (Mercer is not associated with any of the aforementioned insurers.) On a given quarter the Index may be compiled from pricing data from some or all of these insurers. Actual annuity pricing can vary significantly from these sample prices.

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