Pension Risk Transfer Attractiveness Improves

The Dietrich Pension Risk Transfer Index increased from its prior month level of 84.92 to 86.71 as of February 1, 2013. 


The index, which tracks the relative attractiveness of annuitizing pension liabilities, rose primarily due to an increase in the average funded status of pension plans. The current annuity discount rate proxy embedded within the index also rose by seven basis points and currently sits at 2.61%.

“Last month witnessed a productive combination of rising asset values and interest rates, leading to a general improvement in the funded status of a typical pension plan,” said Jay Dinunzio, senior consultant at Dietrich & Associates. “Annuity discount rates have inched higher over the last several months, while funded status has ticked up each of the last three months. Collectively, these factors have contributed to a reduction in the settlement cost environment. We expect these conditions will have many pension committees considering increased allocations to fixed income and/or accelerating pension settlements in order to effectively take some money off the table and lock in some of the gains experienced over the last few months.”

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.

Dietrich Pension Risk Transfer Information can be found at