Deals & People April 30, 2014

MassMutual Names Actuarial Services Head

MassMutual Retirement Services appointed Steven Mendelsohn as national practice leader for the firm’s defined benefit actuarial consulting practice.
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Mendelsohn takes on leadership of three actuarial and data teams that help manage 1,300 defined benefit (DB) and cash balance plans covering 800,000 participants and $16 billion in assets. He reports to Bill Silvanic, a senior vice president of product for MassMutual’s Retirement Services.

Mendelsohn says he will work to further expand MassMutual’s ability to match investment strategies to longer-term costs and enable the firm to provide more predictable year-over-year results for plan sponsor clients.

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He adds that, despite the general trend away from DB arrangements in favor of defined contribution (DC) plans, many employers continue to provide DB pension plans for their employees and need comprehensive services to ensure they achieve the goal of providing secure, dependable income for retirees. As the DB pension market has contracted, so too has the number of firms providing support services for plans and financial advisers who market them, he says.

Mendelsohn brings 30 years of pension actuarial consulting and compliance experience to MassMutual. Prior to joining the mutual insurer, he held roles as a retirement practice leader with Aon Hewitt and served as executive vice president and chief actuary with Retirement System Group Inc. He is an federally enrolled actuary, a fellow of the Conference of Consulting Actuaries and a member of the American Academy of Actuaries.

He holds a B.A. in mathematics from the State University of New York (SUNY) at Albany.

The Markets April 30, 2014

Pension Annuitization Attractiveness Unchanged

The attractiveness of pension annuitization, as tracked by Dietrich & Associates’ Pension Risk Transfer Index, is relatively unchanged from March.
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As of April 1, the index reached 95.55, increasing slightly over last month. Modest gains in the annuity discount rate proxy (3.17%) and plan funding levels have helped turn the index trend around.

On average, the index finds the monthly cost to transfer pension risk off the corporate balance sheet has been steady this year. However, when taking a closer look there is much volatility that doesn’t register on a monthly metric, says Geoff Dietrich, vice president of Dietrich & Associates, based in Plymouth Meeting, Pennsylvania. “The planning behind the eventual transfer will dictate the outcome. Understanding the various options and carrier capacity, as well as the timing of the purchase, is crucial for plan sponsors looking to shed pension liabilities.”

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The index provides a dynamically constructed, monthly directional data-point regarding the market conditions that affect 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.

To arrive at its final conclusions each month, the index considers three underlying financial ratios, which include: funded status level (50% index weight); current and historical annuity rates (30% index weight); and annuity rates versus Treasury and corporate bonds (20% index weight).

The April index results can be found here. A video of additional commentary can be viewed here.

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