Pension Risk Transfers Less Attractive at Start of 2012

January 20, 2012 ( - The Dietrich Pension Risk Transfer Index dropped from its prior month’s level of 87.52 and currently sits at 86.65 as of January 1, 2012.

The Index tracks relative attractiveness of annuitizing pension liabilities. The decline was driven mainly by lower annuity discount rates (currently 3.20%) in addition to a drop in pension funding levels.  

According to Jay Dinunzio, senior consultant at Dietrich & Associates: “While the economics of a standard pension plan termination remain challenged by underfunding and low relative interest rates, plan sponsors may be surprised to learn about new insured pension risk transfer strategies which may offer some compelling alternatives to traditional market valued bond funds. Prudent fiduciaries should also consider their existing governance and decision making processes to ensure that they have a mechanism to evaluate and monitor insured pension risk transfer solutions as part of their ongoing investment review activities.”  

The Dietrich Pension Risk Transfer Index can be found at