Future PRT Volume Could be Limited by Multiple Factors

The market for corporate defined benefit plans offloading liabilities to annuity providers has seen tremendous growth in the past decade. The pension risk transfer market collected $48.8 billion in premiums in 2025, according to Mercer—the fourth year in a row to exceed $45 billion. PRT volume stood at $14.1 billion in 2016, for comparison.

Still, the market faces some headwinds, particularly the increase in Employee Retirement Income Security Act-based lawsuits against pension plan sponsors and annuity providers alleging the transactions are risky and a breach of fiduciary duty. Additionally, Capital Group has identified multiple structural headwinds that could affect the market.

PRT deals include both buyouts, in which the plan sponsor buys an annuity and transfers pension liability to the insurer providing the contract, and buy-ins, in which a plan sponsor buys an annuity contract, which becomes an asset of the plan, to cover specific liabilities, but the pension fund retains responsibility for making pension payments and serving as the plan fiduciary.

Last year, U.S. PRT volume slightly declined from a high of $51.8 billion in 2024—with the value of buy-ins increasing to about one-third of total volume in 2025 at $17.52 billion, up from just $3.67 billion in 2024.

Fewer DB Plans

In conjunction with the rise of PRTs, the number of corporate defined benefit plans has shrunk over the past few decades. In 1975, following the passage of ERISA, one-third of private plans filing a Form 5500 were defined benefit plans, according to the

“We do see a decline in overall pension risk transfer and a skew in the direction of buy-ins, as opposed to buyouts, and naturally … litigation risk is part of the explanation,” says Colyar Pridgen, Capital Group’s lead pension solutions strategist. “Looking closer at the underlying drivers of pension risk transfer demand, several appear to be rapidly deteriorating, in ways that may be permanent.”

With many corporate pension funds in surplus territory—pushing close to an average of 110% funded level by some barometers—Pridgen notes that the current structure of PBGC premiums incentivizes plans with significant funding deficits to move liabilities to an insurer.

“Those big savings drop by almost 90% once deficits shrink below a threshold that’s only increasing every year,” Pridgen says. “Funding levels are improving, and the number of plans with large deficits is shrinking. So the pool of plans able to achieve big PBGC premium savings from pension risk transfer is rapidly shrinking.”

If a pension fund has “a large enough deficit to achieve those PBGC savings, the economics do make sense to do a PRT,” Pridgen says. “It’s just [that] the number of plans for which those economics apply has gotten a lot smaller and will likely continue to shrink.”

Improved Financial Status

Pridgen also notes that the liability of corporate pension funds relative to the plan sponsors’ market capitalizations has come down, as corporate valuations have surged and liabilities have decreased. “There was a period where there was a lot of concern around the pension tail wagging the corporate dog,” Pridgen says, “and a lot of CFO energy spent on pensions in earnings calls and such, and that’s just shifted a lot in the last five years or so.”

As company financials have improved and market caps have grown, this has become less of an issue for chief financial officers.

“There are still some sponsors for which there is concern around the size of the pension relative to the broader business, but that’s much fewer and farther between than in the past,” Pridgen says, noting that both the relative size of pension obligations and the opportunity for achieving large PBGC premium savings have historically been important drivers of PRT volume.

Market volatility was also a headwind for PRT transactions in the first half of 2025, with many plan sponsors choosing to delay transactions as a result of the volatility that emerged after President Donald Trump’s initial tariff announcements in April. The war in Iran—which began on February 28, nearly one year later—has introduced more market volatility.

“Longer term, I do think we could see a more sustained downtrend than conventual wisdom might suggest, due to a deterioration in the pool of plans that meet the criteria for significant incentive to transfer risk,” Pridgen says.

The findings will be part of a forthcoming Capital Group white paper.