Products October 18, 2013

Tool Helps Plan Sponsors Choose TDFs

Allianz Global Investors offers its web-based Target-Date Tool Set for retirement plan advisers.
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The tool set is designed to help advisers guide plan sponsors through the target-date fund selection process and make prudent selections for their plans. The tool, which is powered by PlanTools, provides detailed analytics for more than 35 unique fund series.

“Target-date funds are still a relatively new investment category and are often misunderstood,” said Glenn Dial, head of retirement sales at the New York-based Allianz Global Investors Distributors. “With this in mind, our new web-based tool aids advisers as they guide plan sponsors through the target-date fund universe, and ultimately, select a fund that suits their plan’s needs.”

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The tool features an online questionnaire and a competitive analytical report that helps systematically evaluate which target-date fund meets a plan’s goals. The questionnaire highlights key considerations for choosing “to” versus “through” target-date funds, and helps document the target-date fund selection process to fulfill plan sponsors’ fiduciary obligations.

Once the questionnaire is completed, the results are scored and interpreted. Advisers and plan sponsors are then able to generate an analytical report comparing target-date fund families that most closely meet the needs of the plan. The report highlights elements that are unique to target-date funds, such as glide path comparisons, number of underlying investment managers, exposure to inflation protection, and risk profiles by vintage.

The tool can be accessed here.

Allianz Global Investors are diversified active investment managers with $409 billion in assets under management.

The Markets October 18, 2013

Pension Risk Transfer Attractiveness Increases

The Dietrich Pension Risk Transfer (PRT) Index increased during September, growing from 94.77 to settle at 96.19 as of October 1, 2013.
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Improving pension funding levels and expanding spreads of corporate bonds against Treasuries drove the 1.42 point gain. The index’s current annuity discount rate proxy of 3.21% dropped 2 basis points in the same time period.

Geoff Dietrich, vice president of Dietrich & Associates, said long-term interest rates have slipped some since the Federal Reserve readjusted the outlook for its quantitative easing policy, but the cost to insure pension obligations through annuitization has not suffered as a result.  

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“This shows us that interest rates are not the sole factor driving the price of PRT,” Dietrich said.  “This market is dynamic.  There are too many factors involved and the Index is proof of that.”

Dietrich said dismissing PRT due to interest rates alone is “not sound decisionmaking.”

The Dietrich Pension Risk Transfer Index provides a dynamically constructed, monthly directional data-point regarding the market conditions that affect PRT settlement costs. Higher index values indicate a reduction in the settlement cost environment. The index was designed to provide pension stakeholders a thoughtful mechanism for monitoring settlement market conditions and to support effective plan governance and decisionmaking.

The Dietrich Pension Risk Transfer Index can be found here.

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