Q&A: Leader of Nationwide Pension Risk Transfer talks trends shaping the industry in 2026

Cole: The marketplace only posted sales of $49 billion on 700 transactions - a 6% decrease from 2024 sales and a 12% decrease in the number of total transactions. The industry faced a perfect storm in 2025 - market volatility, escalating trade wars, the threat of a recession and elevated litigation concerns. These challenges caused many plan sponsors to wait to make any de-risking moves, particularly in the jumbo market, leading to a drop in overall industry activity.

However, the funded status of the largest corporate defined benefit (DB) plans continued to increase throughout the year - making PRT transactions like buy-ins particularly attractive. According to Milliman's Multiemployer Pension Funding Study(MPFS), the aggregate funded percentage of all multiemployer plans reached 103% at the end of the year, up from 97% a year prior. This is the highest aggregate funded percentage for multiemployer plans in the 20-year history of the MPFS and a 50-percentage-point improvement since the 2008 global financial crisis.

Cole: Much of the uncertainty that emerged in 2025 will still be present in 2026. Although we anticipate some of these trends becoming less concerning for plan sponsors, we still expect 2026 to be another slow year for the PRT industry, with sales coming in flat or potentially below 2025. Advisors should watch the following trends in the marketplace:

• Buy-in activity: Activity significantly increased in the buy-in market in 2025, and we anticipate that trend will continue in 2026. In a buy-in, plan sponsors purchase an annuity contract from an insurer that is held by the pension plan as an asset while liabilities remain on the plan sponsor's balance sheet. Buy-ins offer plan sponsors with well-matched assets and liabilities the ability to lock in current pricing, taking advantage of the industry's record-setting pension funded statuses. With today's economic uncertainty not expected to relent any time soon, plan sponsors will be looking to lock in rates as soon as they can, making buy-ins an attractive option in today's economy.

• Interest rates: Nationwide's Office of Economics expects presumptive new Fed Chair Kevin Warsh and the Fed to resume rate cuts by mid-year, lowering the federal funds rate by a total of 50 basis points by the end of 2026. Interest rate cuts can be troublesome for PRTs, as they can impact pension fund obligations and make a plan less funded. Much like in 2025, impending rate cuts may continue to deter larger companies from bringing jumbo transactions to the marketplace in 2026.

• Pending lawsuits: Several different lawsuits regarding PRT providers are still working their way through the legal system. While these suits target specific features of some carriers or unique transactions, we believe in the continued strength and security of the PRT market under the guidance of the Department of Labor. As the courts make decisions on the remaining cases, we anticipate seeing more plan sponsors move forward with PRT transactions.

Cole: PRTs have become increasingly popular over the last decade as a tool to protect plan participants' future pension payments. The number of financial services companies offering these transactions in the U.S. has more than doubled in the last 10 years with 23 carriers offering PRTs at the end of 2025. We expect this growth to continue in 2026, especially as companies continue the trend of specialization in different segments across the industry.

As the U.S. marketplace continues to evolve and expand into the international market, providers who offer exceptional experiences through pricing, reputation, security and customer service will become preferred partners for plan sponsors. For example, at Nationwide, we've seen an increase in the number of plan sponsors completing repeat PRT transactions with us due to our commitment to providing extraordinary experiences for our customers.

Cole: The best place to start is data management. Insurers responding to requests for proposals for a group annuity need accurate plan participant data to price their product. Help plan sponsors verify benefit amounts, primary and contingent annuitants and key information. If possible, help them digitize their information for more seamless future transactions. If your clients are testing out AI capabilities, you can also discuss leveraging those tools to efficiently organize their data. The better the data, the better the experience when it comes to de-risking.

Next, start reviewing the people who will be involved in a PRT. Plan sponsors need to have a strong team of actuaries, legal counsel, recordkeepers and plan administrators to process the transaction and reduce risk for the company. PRTs also require issuing an RFP to insurers to find the best group annuity contract. Help your clients review insurers and choose the right group annuity for their participants by reminding them of the six factors laid out by the DOLwhen reviewing RFP responses.

Lastly, talk your clients through the different types of PRT strategies. I've already mentioned that buy-ins are surging in popularity, but plan sponsors may also be interested in buy-outs, lump-sum windows or plan terminations.

• Buy-outs transfer all or a portion of a pension plan, including assets and liabilities, to an insurer who issues an annuity contract directly to participants and pays benefits, removing liabilities from a company's balance sheet.

• Lump-sum windows allow participants to convert their vested benefit in a pension plan to a one-time, lump sum payment.

• In a plan termination, insurance companies take over all of the plan sponsor's pension obligations and the plan is closed.

Several factors can impact a plan sponsor's decision, so talk to them about their level of funding and the DB plan's benefit formula to help them make the most informed choice.

There are additional considerations for plan sponsors who aren't able to provide future associates with robust pension benefits but still want to ensure they have access to lifetime income. In addition to researching PRT strategies, they can consider working with a recordkeeper to ensure they modernize their employer-sponsor retirement plan with the latest features, which could include offering Protected Retirement Solutions.These are funds that can be offered in a retirement plan's investment lineup that can help offer pension-like¹ income in retirement. This way plan sponsors can rest assured that their participants have access to the tools they need to plan for retirement income in more ways than one.

¹ This term refers to the similarity between Nationwide's Protected Retirement income solutions and a traditional pension plan in the sense that both can provide a stream of income for participants' lives. However, it's important to note that these solutions are not pensions. The term "pension-like" is used solely to illustrate the income feature of the solutions and does not imply any other characteristics typically associated with pensions.