The index, which tracks the relative attractiveness of annuitizing pension liabilities, increased from a value of 97.10 to 97.12 as of December 1—the last measurement scheduled for 2013. The index’s current annuity discount rate proxy is up five basis points over the previous month’s results, reaching 3.26%.
As such, the environment to transfer pension liability continues to improve and remains strong as 2013 comes to a close, says Geoff Dietrich, vice president of Dietrich & Associates, which maintains the index.
“Plan sponsors who actively considered their insured risk transfer options in 2013 are now harvesting their efforts,” Dietrich says. “The increase in activity is a direct result of educated, risk-adverse sponsors who understand their transfer options and the drivers behind affordability, in connection with active monitoring of market conditions.”
The index provides a dynamically constructed, monthly directional data point regarding the market conditions that affect settlement costs. It is designed to provide pension stakeholders a mechanism for monitoring settlement market conditions, and to support effective plan governance and decisionmaking.
The Dietrich Pension Risk Transfer Index can be found at https://www.dietrichassociates.com.