Various Factors Make PRT Deals More Likely in 2023

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An analysis for Chief Investment Officer by Andrea Riquier suggests that investment strategies in 2023 will include a greater number of PRT deals. This is because of the complex interaction of factors including the recent increase in interest rates. In March 2021 when the American Rescue Plan Act provided relief to corporate employers struggling with higher pension contributions, the 10-year note yield was just 1.52%; in November 2022 it was over 4%. This change makes pension risk transfers even more attractive to plan sponsors.

“In 2020 and into 2021, a lot of plan sponsors still looked at pension risk transfer as potentially cost prohibitive,” Clark said. With funding status much improved, this now looks like a perfect moment to shed risk.”

You can read the analysis here.