Filed Under:Life Insurance, Life Planning Strategies

Dietrich Pension Risk Transfer Index rises

Photo credit: jscreationzs
Photo credit: jscreationzs

Healthier pension funding amounts and to a lesser extent wider annuity rate spread levels led to an uptick in the relative attractiveness of annuitizing pension liabilities at the beginning of this month, reports Dietrich & Associates, Inc., which formulates the Dietrich Pension Risk Transfer Index™.

On September 1, the index stood at 81.33, up from the prior month’s level of 79.8, which was a historical low. Also at a historical low point was the annuity discount rate proxy embedded within the index that fell to 2.51%.

In a press statement from Dietrich & Associates, Jay Dinunzio, senior consultant at the Philadelphia-based provider of institutional annuity brokerage and consulting services, said that despite the positive improvement, pension annuitization affordability remains challenged due to low interest rates and depressed funded status levels. “Sponsors will likely need increases across the board in terms of contributions, interest rates and asset values in order to close the funding gap,” Dinunzio said. “The combination of how and when these increases are realized will ultimately separate the winners from the losers.”

Dinunzio went on to describe the two target client bases well suited for possible pension annuitization. They include retiree-heavy pension programs where more than 50% of the obligations are owned to in-pay-status pensioners and those plans whose current asset allocation is weighted toward fixed-income assets. “In these instances, the benefits of annuitization may outweigh the costs involved, especially for frozen pension sponsors focused on exiting the pension liabilities efficiently,” Dinunzio said.

Featured Video

Most Recent Videos

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Protesters Disrupt WellPoint Annual Meeting


Hecklers call for more disclosures of information about political contributions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.