Pension Risk Transfer Index: September 2012
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The Dietrich Pension Risk Transfer (PRT) Index tracks the attractiveness of annuitizing pension obligations with a monthly benchmark based on funded status, annuity rates, and comparisons to treasury/corporate bonds. As of September 1, 2012, the index increased due to improved pension funding levels and a rise in annuity rate spreads, with current discount rates reaching historical lows. The information provided is not certified by Dietrich & Associates and should be independently verified.
Pension Risk Transfer Index: September 2012
- 1. PENSION RISK TRANSFER INDEX ™ September 1, 2012 PRT Index Level What is the Dietrich Pension Risk Transfer (PRT) Index ? The Dietrich Pension Risk Transfer Index has been designed to create a monthly 81.33 benchmark that tracks the relative attractiveness of annuitizing accrued pension obligations by considering three key underlying financial ratios 80 95 105 120 Funded Status Level (50% Index Weight) Annuitization Attractiveness Current /Historical Annuity Rates (30% Index Weight) Plan/Monitor Opportunistic Settlement Attractive Annuity Rates vs. Treasury and Corporate Bonds (20% Index Weight) Aug 2010: Jan 2009: Index Low =79.8 Index High =121.4 Annual PRT Index PRT INDEX Monthly PRT Index PRT INDEX 108.00 130.0% 103.00 110.6 121.4 98.00 110.0% 93.00 88.00 90.0% 91.5 90.0 83.00 86.7 70.0% 78.00 May-10 May-11 May-12 Jan-10 Mar-10 Jan-11 Mar-11 Jan-12 Mar-12 Jul-10 Nov-10 Jul-11 Nov-11 Jul-12 Sep-10 Sep-11 Sep-12 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Effective 9/1/2012 Commentary: The monthly index level buoyed upward by a rise in pension funding levels, and a slight uptick in Annuity Rate spreads. The current annuity discount rate proxy of 2.51% reached a new historical low. 1 Dietrich & Associates does not certify the information nor does it guarantee the accuracy or completeness of such information. Use of such information is voluntary and should not be relied upon unless an independent review of its accuracy and completeness has been performed. Materials may not be reproduced without the express consent of Dietrich & Associates.