Monthly barometer that evaluates the attractiveness of annuitizing accrued pension obligations. Useful resource for stakeholders of frozen defined benefit pension plans.
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Dietrich & Associates: Pension Risk Transfer Index August 2011
1. PENSION RISK TRANSFER INDEX
August 2011 PRT Index Level
What is the Pension Risk Transfer (PRT) Index?
The Pension Risk Transfer Index has been designed to create a monthly benchmark 90.1
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) Sept 2010: Jan 2009:
PRT Index =82.7 PRT Index =121.4
PRT Index Monthly PRT Index PRT INDEX
Annual PRT Index
140
108.00
130
103.00
120 110.6 121.4
98.00
110
100 93.00
90 88.00
80 91.5 90.0 83.00
70 78.00
Jan-08 Jan-09 Jan-10 Jan-11
Effective 8/1/2011
How does this information help a pension stakeholder?
The PRT Index provides a simple way to monitor many inputs that may drive the financial decision regarding if and when to consider annuitizing pension obligations. Many
sponsors are interested in shedding their liabilities but struggle with determining when or at what cost. The PRT Index provides a simple mechanism to help support that
dynamic and company specific decision making process.
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 1
consent of Dietrich & Associates.