Q&A: Leader of Nationwide Pension Risk Transfer breaks down industry sales dip

Cole: The marketplace is coming off a phenomenal 2024, bringing in sales of $52 billion on 794 transactions – a 14% increase from 2023 sales and a 3% increase in the number of total buy-in and buy-out transactions year-over-year. Eight separate multi-billion-dollar deals, which accounted for over $20 billion in total sales, largely drove growth in 2024, representing 40% of the industry’s total premium for the year.

However, the first quarter of 2025 is playing out differently. The marketplace only posted sales of $7.1 billion on 127 transactions – a 51% decrease from Q1 2024 sales and a 13% decrease in the number of total transactions. The industry is now facing a perfect storm – market volatility, the possibility that escalating trade wars will lead to a recession and the threat of pending lawsuits. These challenges are causing many plan sponsors to wait to make any de-risking moves, causing a drop in industry activity.

Cole: Although we’re off to a slower start, Nationwide expects PRT demand to increase as we head into the second half of the year – it just won’t be enough to fuel another record-breaking year. Market instability generally results in fewer PRT transactions, but as soon as markets stabilize, demand returns. If we think back to 2020 when the markets crashed and then stabilized a month later, we saw a surge in PRT transactions around that time. When markets stabilize again, which we hope will happen sooner rather than later, we should see a return in PRT demand.

In the meantime, advisors should work with plan sponsors to review their data and prepare for future transactions. Verify benefit amounts, primary and contingent annuitants and key information. Ensure plan sponsors have their information digitized for more seamless future transactions. The better the data, the better the experience when it comes to de-risking.

Cole: One of the ways PRT providers can make the de-risking process simpler for plan sponsors with larger pensions is by offering asset-in-kind (AIK) funding. Not all plan sponsors can come up with the cash to completely fund a PRT transaction. In these cases, AIK funding is possible if there are assets or investments held within the pension plan that the PRT provider can leverage. AIK funding can provide an alternative to liquidating a portfolio to pay for a PRT, as well as help minimize funding volatility. If you are an advisor working with a plan sponsor, make sure they are aware of this funding option. Nationwide accepts AIK funding as part of our plan for continued growth by offering support and alternative funding for larger and jumbo deals. In fact, we worked with six plan sponsors and their advisors in 2024 on AIK bids and expect to see that number increase over time.

Cole: One way Nationwide is simplifying the PRT process for plan sponsors and advisors is by spending time really digging in to understand how our customers want to consume information. We’ve learned that when it comes to the de-risking process, plan sponsors, advisors and plan participants want quick, easily digestible materials that include visuals. We’ve made changes to our welcome kits based on that feedback that makes it easy for participants to quickly get the information they need, simplifying the transition process and ensuring they feel cared for by Nationwide. It’s not just what you share, but how you share it when it comes to making a PRT transaction simple.  

RTM-0166AO
05/2025