Pension Risk Transfer Attractiveness Unchanged

March 14, 2013 ( – The relative attractiveness of annuitizing pension liabilities was virtually unchanged in February.

The Dietrich Pension Risk Transfer Index increased slightly from its prior month level of 86.71 to 86.98 as of March 1, 2013. The nearly unchanged index level was driven primarily by a flat pension funding levels.   

The current annuity discount rate proxy embedded within the index also dropped by five basis points and currently sits at 2.56%. This change was offset by a slight increase in interest rate spread levels.   

According to Jay Dinunzio, senior consultant at Dietrich & Associates, “The economic outlook remains uncertain. Equity indices are reaching new historical highs, against a backdrop of political dysfunction surrounding the nation’s budget and debt issues. One thing remains clear that pension funding levels have improved significantly over the last six months, and now may be an ideal time for pension committees to reconsider their strategic asset allocation and further investigate the cost/benefits of a pension risk transfer transaction. If the last decade has taught us all one thing, it is that markets are volatile and asset/liability gains can evaporate quickly.” 

The Dietrich Pension Risk Transfer Index can be found at