Quarterly Annuity Update | USI Consulting Group

Q3 2026: Pension Sponsors Capitalize on a Favorable Environment for Risk Transfer

As of September 30, 2026, our Pension Risk Transfer team executed 62 annuity placements totaling $812 million and covering approximately 10,200 plan participants.

Transaction activity reflects continued demand for both targeted and comprehensive risk transfer solutions. Of the placements completed this year, 41% supported ongoing pension de-risking strategies while 59% facilitated full plan terminations, demonstrating our ability to guide plan sponsors through a wide range of annuity transactions.

Client outcomes remain strong. Average annuity placement savings reached 4.1% through the first nine months of 2026, reflecting the value of competitive insurer bidding, disciplined transaction management and deep relationships across the insurance marketplace.

Plan sponsors are taking advantage of interest rates that remain near 20-year highs, as reflected in other long-duration financial instruments, including fixed-rate mortgages and 10-year and 30-year Treasury securities. Activity in the under $50 million market has increased compared with prior years.

USI's retirement consulting professionals continue to help organizations evaluate annuity placements, improve cost efficiency and execute pension risk transfer strategies with confidence.

recent-annuity-rates-q3-2026

Sources: FTSE Pension Liability Index Report for October 2026; Treasury.gov

Pension Plan Landscape & Industry Trends — Pension Risk Transfer

Pension risk transfer strategies help plan sponsors reduce financial exposure by shifting pension liabilities to an insurance company. A buy-out is a standard contract in the industry, transferring assets and liability from the plan sponsor to insurance company. A buy-in locks in future buy-out pricing with no accounting settlement. The assets and liabilities are maintained within the plan and held in a contract with the insurance company.

U.S. Pension Risk Transfer Demand Continues

Small to Mid-Market Placements Lead Q2 2026 Sales

$3.0 Billion in U.S. Pension Risk Transfer Sales for Q2 2026	Observations from Q2 2026
This is a decrease year-over-year of 26% in premium 176 contracts were placed, an increase of 21% with most contracts under $50M Large/Jumbo contracts expected to place in second half of 2026: no placements of $250M + occurred in Q2 2026	De-risking strategies represented 60% of sales, with the remaining 40% attributed to plan termination Plan sponsors locking in favorable funded status Buy-Ins Annuities continue to be a solution, with $225M placed in Q2

Sources: LIMRA, TruStage, Insurance Journal.

Observations from USI’s Retirement Annuity Placement Practice

Interest rates continuing to increase – lowering contract premiums

Annuity rates follow similar trend as 10-year Treasury rate, which is at a 24-year high

Preliminary quotes are more conservative than previous years

Interest rate changes and competition drive final premiums lower

PRT insurer TruStage (a.k.a. CUNA Mutual) had a cybersecurity attack on July 11

No PRT monthly participant payments were impacted but customer service remains limited as company restores systems
PRT assets were not impacted

2025 PRT market entrant Delaware Life is facing scrutiny by the SEC for not reporting related-party investments

Rating agencies have affirmed A- Rating but outlook is negative
Reclassified assets are not PRT premiums

Pension Plan Landscape & Industry Trends — Returns

EQUITIES MIXED IN Q3 2026	INTEREST RATES RISING IN Q3 2026
US Large Cap (S&P 500) increasing 2.3% US Small/Mid Cap (Russell 2000) decreasing 7.2% International (MSCI ACWI Ex US) increasing 0.5%	Treasury yields increasing 2-Year increasing 74bp from 4.14% to 4.88% 10-Year increasing 85bp from 4.44% to 5.29% 30-Year increasing 73bp from 4.91% to 5.64%
PENSION PLAN FUNDED STATUS IMPROVED IN Q3 2026	CREDIT SPREADS HAVE WIDENED
Plan assets, 60% equity/40% fixed income allocation, decreasing 1.2% 40% S&P 500, 10% Russell 2000, 10% MSCI ACWI ex. U.S., 40% Bloomberg U.S. Aggregate Bond Plan liabilities with a 13-14 duration increasing 8.4% Excess return of assets over liabilities of 724bp	FTSE Pension Liability Index increasing 84bp from 5.70% to 6.54% FTSE Pension Liability Index - Intermediate increasing 84bp from 5.60% to 6.44%

Market Summary for Pension Plans

pension-returns

Sources: Morningstar, U.S. Treasury, FTSE Pension Liability Index Report. Data as of September 30, 2026.

Pension Plan Landscape & Industry Trends — Monitoring

PENSION LIABILITY INDICES	PENSION LIABILITY CURVE
This chart tracks the Discount Rate and Liability Duration from 2016 through 2025. It highlights how interest rate changes and liability durations impact pension obligations over time. A rising discount rate typically reduces liabilities, while longer durations indicate greater sensitivity to rate changes which are key metrics for monitoring plan health.	This curve compares pension liabilities across different maturities (6 months to 30 years) at two points in time. It shows how liabilities shift with changes in the yield curve, helping plan sponsors understand the timing and magnitude of future obligations.
INDEX MODEL LIABILITIES	FUNDED STATUS SENSITIVITY
This chart contrasts projected benefit payments with their present value across a 90-year horizon. It visualizes the long-term financial commitment of pension plans and the impact of discounting future benefits essential for evaluating funding strategies and sustainability.	This chart helps plan sponsors understand how interest rate changes affect liabilities and funding levels which is critical for risk management and strategic planning. It shows how a pension plan’s funded status reacts to shifts in the yield curve, ranging from -2.0% to +2.0%. Each row represents a starting funded status (from 75% to 135%), and each column reflects the impact of interest rate changes. Blue cells indicate improved funding (typically from rising rates), while gray cells show deterioration (from falling rates). For example, a plan that is funded at 100% today could decline to 83% funded with a 2.0% decrease or rise to 119% with a 2.0% increase in interest rates.

Sources: USI Consulting Group. Data as of September 30, 2026.

STRATEGY BEFORE PLAN TERMINATION:
Surplus Management, De-Risking and the Role of Group Annuities

We hosted an informative webinar offering practical insights into the pension plan landscape and plan termination strategies.

If you couldn't attend, watch the on-demand webinar to learn about the strategy of de-risking, annuity placement and surplus management—and how these approaches impact the plan termination process.

WATCH NOW

How USI Can Help

Our retirement consulting ream is pleased to offer the opportunity to purchase single premium annuity contracts through a menu of quality insurance carriers. Our actuaries and annuity product consultants are trained to assist clients on the merits and/or limitations of a single premium annuity purchase for their specific cases. Our proactive consulting by an integrated team can provide savings that exceed an individual de-risking strategy.

To learn how we can help you, please contact your USI retirement consultant, visit our Contact Us page or email us at information@usicg.com.

Investment advice provided to the Plan by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. Both USI Advisors, Inc. and USI Securities, Inc. are affiliates of USI Consulting Group. | 2126.S0729.99025