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High-level monthly barometer of pension annuitization affordability
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1
PENSION RISK TRANSFER INDEX ™
August 1, 2012 PRT Index Level
79.80 120
Plan/Monitor Opportunistic Settlement Attractive
Sept 2010: Index Low =82.7
Jan 2009: Index High =121.4
80 95 105
Annuitization Attractiveness
What is the Dietrich Pension Risk Transfer (PRT) Index ? The Dietrich Pension Risk Transfer Index has been designed to create a monthly benchmark that tracks the relative attractiveness of annuitizing accrued pension obligations by considering three key underlying financial ratios Funded Status Level (50% Index Weight) Current /Historical Annuity Rates (30% Index Weight) Annuity Rates vs. Treasury and Corporate Bonds (20% Index Weight)
Commentary: The monthly index level was driven to its lowest level on record, by declining pension funding levels, interest rates, and annuity discount rates. The current annuity discount rate proxy of 2.54% has fallen 66 bps since the beginning of the year.
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.
Effective 8/1/2012
110.6 121.4
91.5 90.0 86.7
70.0%
90.0%
110.0%
130.0%
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Annual PRT Index PRT INDEX
78.00
83.00
88.00
93.00
98.00
103.00
108.00
Jan
-10
Mar
-10
May
-10
Jul-
10
Sep
-10
No
v-1
0
Jan
-11
Mar
-11
May
-11
Jul-
11
Sep
-11
No
v-1
1
Jan
-12
Mar
-12
May
-12
Jul-
12
Monthly PRT Index PRT INDEX