39%

The 2013 State of the

Pension Risk Transfer Market

Annuity Settlement Rates

Histo

ric

al S

ale

s ($

Bil)

$2,500

$7,500

$26,000

LDI Glidepaths: increasingly used to hedge pension risk & prepare for

pension exit

Voluntary Lump Sum TV Windows: increasingly used to initiate a

pension de-risking settlement strategy

Annuity Buy-outs: over 60% of frozen pension sponsors have

transferring pension risk as their end game objective. (Source: Cutwater Asset

Management)

2.3

3.2

1.6 1.7

1.3

0.8

1.8

2.9

2.5

1.0 0.9 0.8

2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2.01%

0.60%

2.61%

Current rate

10 Yr. US Treasury

Annuity Spread

1 Year Average: 2.79%

3 Year Average: 3.49%

Last 36 Months:

12 monthly upticks

23 monthly downticks

(Ex-GM & Verizon)

Small Contracts

75+%

of all annuity

placements

< $5 million

60+%

of total placed

premium from

< 5% of contracts

> $50 million in size

Large Contracts

Source: Dietrich & Associates

2012

Buy-out

Sales

($Mil)

3600 %

increase

vs. 2011

of pension sponsors are considering

voluntary lump sums in 2013 (source:

AonHewitt)