A new pension endgame: 5 trends appear to be reshaping risk transfer strategy

For many defined benefit (DB) plan sponsors, recent years have brought a welcome shift in focus. After years spent managing funded-status volatility, stronger funded positions are prompting organizations to reassess the long-term role of their pension plans. For an increasing number of sponsors, the conversation is shifting from how to manage pension risk to when and how to remove it through pension risk transfer strategies.

As more plans reach stronger funding positions, organizations are increasingly assessing how pension risk transfer (PRT) strategies may align with their business goals. In 2025, nearly $49 billion in premiums was transferred through 697 U.S. PRT transactions.

PRT is becoming less about executing a single transaction and more about shaping a long-term direction for pension obligations. Pension buy-ins, expanded insurer capacity, and stronger funded positions are creating new opportunities for sponsors to evaluate how risk transfer supports broader organizational goals.

Here are five trends influencing the PRT landscape heading into 2027.

1. Pension buy-ins have continued to gain momentum

One of the most notable developments in the PRT market is the increased use of pension buy-ins. In 2025, $17.5 billion in U.S. buy-in premiums was placed, reflecting interest in approaches that allow organizations to reduce risk while preserving future alternatives.

A pension buy-in allows a plan to purchase an annuity contract that remains an asset of the pension trust. The insurer assumes responsibility for making payments to the plan, while participants continue to receive benefits from the pension plan itself. In a traditional buy-out, responsibility for benefit payments transfers directly to the insurer.

With a buy-in, sponsors may reduce exposure to investment and longevity risk while retaining control of the plan, it in essence can be a perfect Liability Driven Investment strategy for the covered buy-in benefits. A buy-in has become an increasingly popular approach for sponsors approaching a plan termination and wishing to have more financial certainty on final funding and financial costs. Various buy-in approaches are available depending on the plan’s desire to offer lump sums during the termination process.

2. Sponsors have been moving from de-risking to plan termination

Corporate DB plans ended 2025 with funded levels exceeding 104% on average, continuing a multi-year trend of stronger pension balance sheets. Such improved funded positions are prompting organizations to reassess the long-term role of their plans.

For some employers, maintaining a pension plan remains an important component of their overall benefits strategy and workforce value proposition. However, for organizations that have already frozen benefit accruals, continuing to administer a pension plan may offer fewer strategic advantages over time. As funded positions improve, more sponsors are evaluating whether plan termination can simplify administration, reduce long-term risk, and eliminate ongoing pension-related obligations from the balance sheet.

PRTs can play a central role in an effective de-risking or termination strategy. Whether through a targeted transaction or a broader series of de-risking activities, such risk transfer strategies can help organizations prepare for eventual plan termination.

3. Increased insurer capacity has been creating more opportunities for sponsors

The PRT market has benefited in recent years from expanded insurer participation and increased transaction capacity.

With more insurers participating in the market, plan sponsors may receive competitive bids from multiple providers, giving them greater ability to evaluate pricing, service capabilities, and overall fit. Increased market capacity may also provide more flexibility in transaction timing.

However, more choices don't necessarily make decisions easier. As the marketplace expands, sponsors may need to devote more attention to evaluating insurer capabilities, execution readiness, and long-term participant outcomes to make informed fiduciary decisions.

4. Fiduciary oversight will likely matter more than ever

With more PRTs, there’s increased attention on fiduciary governance. Sponsors are placing greater emphasis on documenting decisions, establishing clear evaluation criteria, and conducting thorough due diligence throughout the transaction process.

Insurer financial strength remains a critical consideration, and sponsors are looking beyond transaction execution to evaluate the participant experience after a transfer occurs. Benefit administration, communications, and long-term service capabilities have become increasingly important factors in insurer selection.

Regardless of whether a sponsor evaluates one insurer or several, documenting a prudent selection process and maintaining appropriate fiduciary oversight remains a critical component of a successful PRT transaction.

5. Endgame planning has become more strategic 

Despite record pension risk transfer activity in recent years, the 100 largest U.S. corporate pension plans still held approximately $1.25 trillion in pension liabilities at the end of 2025, underscoring why pension obligations remain a focus for many organizations.

Taken together, these trends suggest sponsors have more flexibility in how they approach the future of their pension plans. At the same time, the growing range of options makes it increasingly important to align risk transfer decisions with broader business objectives.

Different organizations may pursue different paths based on a plan’s funded status, priorities, and market conditions. Some may favor a phased strategy that incorporates multiple de-risking actions. Others may move directly toward termination when conditions align. The common thread is intentional planning.

Sponsors that establish clear objectives before evaluating specific transactions may be better positioned to prioritize opportunities and make decisions that support those objectives.