Pension Settlement Costs Lower for Second Month

October 8, 2012 ( The Dietrich Pension Risk Transfer Index, which tracks the relative attractiveness of annuitizing pension liabilities, increased for the second month.

As of October 1, the Index sits at 81.99, up from 81.33 as of September 1. The increase in the index was driven mainly by an improvement in pension funding levels. The annuity discount rate proxy embedded within the index rose to 2.54%.  

Corporate pensions have seen two consecutive months of funding improvements (see “Pensions See $45B September Increase in Funding”).  

The index considers three key underlying financial ratios: funded status level (50% index weight), current /historical annuity rates (30% index weight) and annuity rates versus Treasury and Corporate Bonds (20% index Weight).  

The Dietrich Pension Risk Transfer Index can be found at