The cost of purchasing annuities for retirees decreased slightly in June.
The Mercer U.S. Pension Buyout Index showed a drop from 109.5 percent to 109.4 percent of the accounting liability, while the economic cost of retaining the retirees also decreased from 108.5 percent in May to 108.2 percent in June.
Mercer's index allows plan sponsors to see at a glance the relative cost of a buyout by an insurer of retiree liabilities of a defined benefit plan, and how that cost changes over time. It also shows the approximate long-term economic cost of retaining the retiree liabilities on a sponsor's balance sheet, which includes an allowance for the future expenses and risk margin needed to maintain the obligations.
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