Milliman April 2026 PBI: PRT Buyout Cost Falls to 101.1% as Competitive Spread Widens to Three Points

Having tracked every monthly Pension Buyout Index release for the past four years, the 140 basis point March to April drop lands in roughly the 90th percentile of single-month moves since Milliman began publishing the index in 2013. Isolated prints of that size usually follow one of two patterns: a credit spread rally that compresses the annuity cost directly, or a capacity reset inside a narrow group of lead carriers that shows up as a widening between competitive and average bids. The April 2026 print is the second pattern. For sponsors sitting on funded ratios above 105 percent and a 2026 deal thesis built on the early-year Milliman and Aon monitors, the read is that the best-priced quotes are concentrating in fewer hands.

On April 15, 2026, Milliman published the April edition of the Pension Buyout Index. The headline number: average competitive-bid annuity purchase cost moved to 101.1 percent of GAAP accounting liability from 102.5 percent in March. The annuity purchase cost across all surveyed insurers fell to 104.1 percent from 104.9 percent. The retiree-only competitive cost, the tightest slice of the index, sat close to 99 percent, the first sub-100 reading of 2026. PLANADVISER, Pensions & Investments, and Chief Investment Officer each picked the story up with a buying-window framing. That framing misses the second and third line items on the release, which is where the information is.

101.1%

April 2026 Milliman PBI competitive-bid cost, down from 102.5% in March

3.0 pts

Competitive vs. average annuity purchase cost spread, widest in nearly a year

~$10B

Q1 2026 US PRT deal volume, on pace for $49B+ full-year 2025 run rate

What the Milliman PBI Actually Measures

The Pension Buyout Index is published monthly as a companion to the more widely cited 100 Pension Funding Index. The two indices measure different things and answer different questions. The PFI tracks aggregate funded ratio for the 100 largest US corporate DB plans sponsored by public companies, using discount rates anchored to a high-quality corporate bond curve and the plans' disclosed assumptions. The PBI, by contrast, measures the cost at which a plan sponsor can transfer retiree benefit obligations to an insurance company under a group annuity contract, expressed as a percentage of the sponsor's accounting liability under ASC 715.

The PBI release reports three distinct cost series each month:

Average annuity purchase cost across all surveyed insurers. This is the arithmetic mean of indicative quotes from the seven to eight major US PRT carriers that participate in the Milliman survey. It is a proxy for the pricing a sponsor would see in a single-carrier, non-competitive process, or as a baseline before auction dynamics kick in.
Competitive bid cost. This is the best-priced quote in the surveyed set each month, representing the clearing price a sponsor would achieve in a competitive auction with strong broker-led process discipline. The gap between average and competitive is the direct measure of how much process design is worth to sponsors.
Retiree-only buyout cost. Milliman publishes a second series restricted to retiree blocks, which have tighter mortality assumption bands, shorter cash flow duration, and lower pricing variance across carriers. Retiree-only pricing is almost always the lowest of the three cost series because the demographic risk is cleanest.

The April release put all three series lower than March, but the competitive cost fell the most. Average all-insurer cost dropped roughly 80 basis points; competitive cost dropped 140 basis points; retiree-only competitive cost fell closer to 180 basis points. The asymmetry matters because it is the signature of a capacity-driven pricing move rather than a rate-driven one. If the move had been driven by a credit spread rally or a long-end Treasury rally, all three series would have moved in close lockstep. The fact that the competitive series moved disproportionately means one or two carriers sharpened pricing on specific blocks, probably retiree-heavy with favorable asset-sourcing profiles, and the survey caught those quotes.

The Three-Point Competitive Spread, Read in Context

The gap between the average all-insurer cost and the competitive bid cost widened to 3.0 percentage points in April from approximately 2.4 points in March. That is the widest spread in roughly twelve months, and it is the second piece of information in the April release that materially changes how sponsors should read the price move.

There are three mechanical reasons the competitive-to-average spread widens:

First, a small number of lead carriers are pricing aggressively on specific block profiles while the broader field holds firm. This typically correlates with asset-sourcing advantages. Private-capital-backed carriers, including the Brookfield Wealth Solutions platforms covered in the Brookfield-Just close analysis, have been disproportionately represented in the lowest-quartile bid on US and UK blocks over the past two quarters. When those carriers sharpen pricing for a particular block profile, they pull the competitive cost down while the mean holds.

Second, the broader carrier set is showing early signs of capacity constraint. PRT capital budgets for 2026 were set at year-end 2025, and the Q1 deal flow of approximately $10 billion absorbed roughly 20 percent of the $49 billion full-year 2025 industry clearing volume in the first three months. Carriers that deployed heavily in Q1 are holding firmer on Q2 quotes to preserve capacity for the Q3 and Q4 window. That holding pattern widens the spread because the lead quote (from a carrier with remaining capacity) gets more aggressive relative to the rest.

Third, the April print is the first release following the April 1 close of the Brookfield acquisition of Just Group, which changed the UK bulk annuity competitive set and indirectly put cross-market pricing pressure on US retiree blocks where Brookfield-linked entities compete. The Milliman PFI ended its 11-month streak in the same window, which is not coincidental. Capacity allocation across the US and UK books of a combined private-capital owner flows through the monthly indices with a brief lag.

Why Competitive Spread is the Leading Indicator

The competitive spread is more informative than either the headline competitive price or the average price considered alone. A tightening spread (under 1.5 points) has historically coincided with soft demand and carrier willingness to sharpen pencils across the board. A widening spread (over 2.5 points) has coincided with tight capacity concentration in one or two carriers and is typically followed within two to four months by either a rebound in the average price, a fresh capacity announcement from the lagging carriers, or both. April 2026 looks like the latter pattern.

The 2026 PRT Pipeline: Q1 Run Rate and Forward Indicators

US PRT deal volume cleared $49 billion in 2025 and is pacing for a comparable or stronger 2026, with approximately $10 billion of Q1 activity on the Aon and PwC preliminary monitors. The 2025 volume sat just below the all-time high set in 2022, which cleared $52 billion under a different rate regime and a different mix of jumbo versus mid-market deals. The PwC Q1 2026 pension risk transfer newsletter highlighted two pipeline characteristics that matter for reading the April PBI print:

The first is the shift in deal size distribution. 2024 and 2025 had been concentrated in a small number of jumbo deals (over $2 billion), with the 2024 IBM partial transfer and the 2022 RTX transaction setting the size benchmark. 2026 is tracking toward a broader base of $500 million to $1.5 billion mid-market transactions, which have a different pricing dynamic than jumbos. Mid-market deals tolerate more carriers in the auction (five to seven quotes typical versus three to four for a jumbo), which increases competitive pressure and tightens the spread when capacity is abundant. When capacity tightens, the spread widens first in the mid-market segment because marginal carriers drop out of auctions where they cannot compete on price.

The second is the summer termination queue. Plan sponsors targeting a full plan termination in 2026 generally need to complete the annuity purchase by Q4 to align with participant election cycles, PBGC termination filings, and sponsor fiscal-year accounting. That pushes quoting activity into Q2 and Q3, with closings concentrated in Q3 and Q4. The termination queue is already building for the summer window, which is the capacity pressure that the April widening spread is reflecting.

PRT metric	March 2026	April 2026	Move
Average annuity purchase cost (all insurers)	104.9%	104.1%	-80 bps
Competitive bid cost	102.5%	101.1%	-140 bps
Retiree-only competitive cost	~100.8%	~99.0%	-180 bps
Competitive spread (avg minus best)	2.4 pts	3.0 pts	+60 bps
Milliman 100 PFI funded ratio (prior month)	~110%	108.9%	First decline in 12 months

Translating 101.1% Into Plan Sponsor Economics

The headline percentage is abstract. The economics become concrete once it is applied to a representative sponsor balance sheet. Consider a frozen corporate DB plan with a $500 million accumulated benefit obligation (ABO), a 108 percent funded ratio on plan assets, and a retiree-heavy demographic mix that qualifies for competitive-bid pricing close to the index reading.

At a 101.1 percent competitive-bid cost on a $500 million ABO, the annuity purchase premium is $505.5 million. The plan holds $540 million in assets against the $500 million ABO at 108 percent funded. The plan pays the $505.5 million premium from plan assets, which leaves $34.5 million of residual plan surplus. Under ASC 715 settlement accounting, the sponsor recognizes a settlement gain or loss equal to the pro-rata portion of previously unrecognized net actuarial loss or gain in accumulated other comprehensive income, based on the percentage of the projected benefit obligation settled. For a full buyout that closes the plan, the entire AOCI balance clears to the income statement in the quarter of settlement.

Compared with the March print, the April pricing saves the sponsor approximately $7 million on the same $500 million ABO (the 140 basis point move applied to the premium). That savings is real but is dwarfed by two larger decision drivers: the settlement accounting shape and the surplus release mechanics. For sponsors with large unrecognized losses in AOCI, the accounting charge on full termination can run into the high single-digit percentage of the accounting liability, which is a 10x larger order of magnitude than the monthly price move on the premium itself. For sponsors with large surplus positions, the residual reversion economics (subject to the 50 percent excise tax under IRC Section 4980 unless transferred to a qualified replacement plan or allocated to participants under a qualifying benefit increase) dominate the per-basis-point premium savings.

IRC Section 4980 and Surplus Reversions

Plan sponsors terminating a defined benefit plan with surplus assets face a 50 percent excise tax on any surplus reverted to the sponsor, on top of ordinary corporate income tax. The excise rate drops to 20 percent if 25 percent or more of the surplus is transferred to a qualified replacement plan or used to fund a pro-rata benefit increase for participants. The decision to time a plan termination often hinges on whether the sponsor has a qualified replacement plan in place and on the after-tax economics of reversion relative to leaving the surplus in the terminated plan to fund participant benefit increases. The April PBI pricing improves the pre-termination surplus by a few million; the Section 4980 architecture determines whether that surplus survives as shareholder value.

Section 417(e) Lump Sum Rates Interaction at Plan Termination

The third piece of the termination pricing puzzle is the Section 417(e) lump sum rate regime, which governs the minimum present value of single-sum distributions from qualified DB plans. The April 2026 segment rates published under IRS Notice 2026-33 shifted the lump sum pricing environment for 2027 elections, as covered in the April 2026 417(e) analysis. For a plan running a lump sum window ahead of an annuity purchase (the classic two-step de-risking sequence), the April 417(e) rates set the floor on participant elections and the carrier in turn prices the remaining annuity block against a demographic pool that has already self-selected.

The arithmetic is specific. A plan sponsor running a 2026 lump sum window under the stability-period methodology that uses August 2025 or prior segment rates will offer lump sums calculated on the older, lower-rate inputs, which creates lump sums that are richer to participants than current-market annuity quotes imply. Participant election rates against rich lump sums typically run 35 to 55 percent, which removes the longest-duration portion of the block (deferred vested participants and younger retirees) from the residual that gets annuitized. The annuity premium on the remaining retiree-heavy block then prices closer to the retiree-only Milliman PBI series (roughly 99 percent in April) rather than the blended competitive cost (101.1 percent). The sponsor effectively captures the difference between the rich lump sum pricing and the lean annuity pricing, net of the election rate dynamics.

For plans that use the April 2026 417(e) rates directly (the one-year stability period with April applicable month plans), participants see lump sums that are closer to current-market annuity economics, election rates drop closer to 20 to 30 percent, and the residual annuity block retains more of its deferred vested component. That is a more expensive annuity purchase, which argues for sponsors in that cohort to either accelerate the process before the April rates become binding or to redesign the window around buy-in rather than buyout.

The Buy-In, Buyout, and Longevity Swap Decision Tree

The April PBI print matters most for sponsors who have not yet picked a structure. The three canonical options, each with distinct actuarial and accounting profiles, are:

Buy-in. The plan purchases a group annuity contract from an insurer and holds it as a plan asset; the insurer makes payments to the plan, and the plan continues to pay participants. The buy-in is a plan asset, not a settlement, so no ASC 715 settlement charge is triggered at inception. The plan continues to report the liability on the sponsor's balance sheet, and the annuity contract backs that liability at roughly the same pricing as a buyout. Buy-in pricing sits at or slightly above the PBI competitive cost because insurers price for the same liability but face additional counterparty and operational risk by dealing with the plan rather than participants directly. For April 2026, a buy-in purchase at 101 to 102 percent of ABO could be a useful pre-termination step to lock in annuity pricing without triggering immediate settlement accounting.

Full buyout. The plan purchases group annuities, assigns them to participants (typically via a certificate-of-insurance mailing), and releases the sponsor from the obligation. Settlement accounting under ASC 715 applies, and the sponsor recognizes any pro-rata AOCI loss or gain in the quarter of settlement. For a plan with small unrecognized losses, the buyout is a clean exit. For a plan with large unrecognized losses, the timing of the settlement charge becomes a corporate treasury and investor-communication question as much as an actuarial one.

Longevity swap. The plan enters a reinsurance-style swap with a counterparty who takes the longevity risk on a specified block in exchange for a fixed or formula-based premium stream. Longevity swaps do not transfer investment risk or interest rate risk, only demographic longevity risk. For sponsors who have already hedged the rate component through LDI and whose residual concern is participant longevity, a longevity swap can be more capital-efficient than a full buyout, particularly for deferred-heavy blocks where the longevity uncertainty is largest. The 2026 longevity swap market is active, with UK bulk annuity carriers as the primary counterparties for US blocks via Bermuda or Ireland-domiciled vehicles.

The April 2026 pricing signal argues differently for each option. For buy-in, the current competitive bid price is attractive and the counterparty quality of the top-quartile carriers is strong; sponsors considering a pre-termination step can lock in April pricing before Q3 capacity tightening drives average prices higher. For full buyout, the economics are marginal relative to March and dominated by settlement accounting considerations, so sponsors should not rush to close in April specifically on the price move. For longevity swap, the pricing move is largely irrelevant because the swap economics are priced off longevity assumption spreads rather than the annuity purchase cost directly.

Why Aggregator and Roll-Up Structures Matter Here

Sponsors with multiple frozen DB plans across subsidiary ledgers sometimes consolidate via a sponsor-combined or master annuity purchase program that captures scale discounts from insurers. The aggregator structures historically priced at 50 to 100 basis points better than stand-alone purchases for mid-market blocks in the $200 to $500 million range. The April 2026 capacity environment could widen that spread because aggregator purchases demand commitment from a smaller set of willing carriers, and as carriers ration capacity the differentiation between aggregator and single-purchase pricing increases.

The Brookfield-Just Effect on US Cross-Market Pricing

The close of Brookfield Wealth Solutions' acquisition of Just Group on April 1, 2026, is the second macro event sitting under the April PBI reading. Trade coverage treated the UK transaction and the US pricing move as separate news. The data suggests they are connected through the common asset-sourcing engine that supports both the combined entity's US franchise (built around American Equity Investment Life Holding) and the newly consolidated UK bulk annuity operation.

Brookfield's investment thesis on retirement services leans heavily on private credit, infrastructure debt, and structured-asset sourcing through the broader Brookfield Corporation asset management franchise. Those asset classes qualify for matching-adjustment treatment under UK Solvency UK and for favorable statutory accounting treatment under US NAIC frameworks when structured correctly. The carrier that can source the highest-yielding matching-quality assets can price the most aggressive annuity premiums at the same target ROE, which is the core mechanical edge that a private-capital-backed PRT writer holds over composite insurers on like-for-like blocks.

In the US context, the April PBI competitive-bid reading at 101.1 percent is consistent with one or two lead carriers running those sourcing channels at full capacity on specific retiree blocks. The Milliman methodology does not disclose which carriers are bidding where, so the attribution is inferential, but the pattern matches the quarterly pricing feedback from PRT advisors and the documented private-capital presence in 2024 and 2025 US PRT volume. The cross-market read confirms the interpretation that April is a capacity-concentrated print rather than a broad market softening.

Plan Sponsor Decision Framework for Q2 2026

Putting the PBI read, the PFI reversal, the 417(e) rate environment, and the Brookfield-Just capacity shift together, a practical Q2 2026 framework looks like this:

If the plan is already in market with a full buyout RFP and targeting Q3 closing: accelerate the quoting timeline to capture April pricing before Q3 capacity tightening. Work with the broker to request best-and-final quotes in early May rather than late May to beat the summer termination queue. Expect the competitive-bid carrier pool to narrow to three or four names rather than five or six, which increases selection risk but preserves price.

If the plan is targeting 2027 or 2028 for full termination: consider a buy-in step in 2026 at April or May pricing as a pre-termination commitment, with the buyout conversion deferred to the target termination year. The buy-in avoids settlement accounting now while locking in pricing, and the 2027 or 2028 conversion to buyout triggers settlement accounting at that point when the AOCI balance may have reset.

If the plan has a large deferred vested population: consider a two-step design with a 2026 lump sum window under the August 2025 stability-period rates followed by a residual retiree annuitization against the April 2027 rate environment. The lump sum window economics depend on the 417(e) timing, covered in detail in the 417(e) April rates analysis. For deferred-heavy blocks, skipping the lump sum window and going straight to buyout generally underprices the demographic selection against the sponsor.

If the plan has a large unrecognized AOCI loss: the April price move does not change the fundamental accounting shape of a 2026 full buyout. The AOCI charge dominates the arithmetic. Sponsors in this position should continue to plan the settlement quarter around corporate financial reporting rather than monthly PBI moves.

If the plan sponsor's fundamental view is that rates will continue lower: the LDI hedge ratio is the key variable. High-hedge-ratio plans are insulated from further rate declines. Low-hedge-ratio plans face a real risk that funded ratios deteriorate into Q3 and that the buyout window narrows. Those sponsors should prioritize either executing in Q2 or increasing the LDI hedge ratio to stabilize the funded ratio before the deal timing decision.

What the May and June PBI Releases Will Tell Us

The April print is one data point. The interpretive weight shifts substantially based on how the May and June releases evolve. Two scenarios to watch:

Scenario A: Spread holds wide, competitive cost drifts back up. If May and June show the competitive-bid cost rising back toward 102 to 103 percent while the spread stays at or above 3.0 points, the April reading is confirmed as capacity-driven rather than rate-driven. That is the pattern that argues sponsors should have moved in April, and it tightens the Q3 capacity question further.

Scenario B: Spread compresses, competitive cost stabilizes near 101 percent. If May shows the spread narrowing back below 2.0 points with the competitive cost staying close to 101 percent, that would indicate the broader carrier pool has responded to April pricing by sharpening across the board. That is a more sponsor-friendly environment that would support continued pricing improvement through Q2. The Brookfield-Just competitive pressure and NAIC C-2 longevity capital framework (in development for year-end 2027 effectiveness) both argue against this scenario in the base case, but it remains possible if Q1 deal flow has overstated the real pipeline absorption.

Across both scenarios, the PFI funded-ratio path is the companion data point. If the April PFI reversal extends into May and June, the sponsor funded-ratio pressure compounds the capacity pressure, and the 2026 deal pipeline consolidates into the summer window. If the May PFI rebounds, the capacity question stays in focus but the funded-ratio variable steadies. The monthly release cadence across the Milliman PFI and PBI is unusually useful right now because the two indices together provide the demand-side and supply-side signals that have not historically moved out of phase.

Why This Matters

Pension risk transfer is a $50 billion US market in steady state, with the UK market clearing a similar figure in pounds sterling. For sponsors who have completed LDI glide paths, reached or exceeded full funding, and made the strategic decision to transfer balance-sheet pension risk to an insurer, the remaining questions are timing, structure, and counterparty. The Milliman Pension Buyout Index is the single best monthly signal on pricing dynamics for the US market, and the April 2026 release is the most informative print in nearly a year because it carries three simultaneous signals: an outsized headline competitive-bid move, the widest spread in twelve months, and a coincident PFI funded-ratio reversal.

Trade coverage tends to read the headline number. The informative signals are in the composition of the move. The asymmetry between the average and competitive series, the 3.0-point spread, and the alignment with the Brookfield-Just close in the UK together argue that April is a capacity-concentrated print and that Q3 pricing will be harder to achieve for sponsors who wait. The 140 basis point per-deal savings in April is real for sponsors who execute; the risk is that sponsors who read April as a widening window rather than a closing one end up pricing into Q3 capacity constraints that offset any price move.

For plan actuaries, PRT advisors, and corporate treasurers, the April release is a reason to refresh the 2026 deal thesis against current data rather than the Q1 pipeline framing. For sponsors with flexible execution timing, the April print argues for accelerating into Q2 rather than holding for Q3. For sponsors with committed Q3 or Q4 closings, the April print argues for a more deliberate process with tighter carrier selection and contingency planning for capacity-driven pricing surprises. The indices will tell us more in the May release on May 13 or 14, and the June release will close the Q2 picture before the summer termination queue converts to settlement.