Pension Annuitization Attractiveness on the Rise

July 11, 2013 ( – The Dietrich Pension Risk Transfer Index, which tracks the relative attractiveness of annuitizing pension liabilities, increased during June.

The index showed the index value increased from 88.92 as of June 1, to 93.54 as of July 1. The 4.62 point gain was fueled by rising interest rates and pension funding levels. The index’s current annuity discount rate proxy of 3.07% increased nearly 70 basis points since May.

“We have witnessed many plan sponsors execute pension risk transfers over the last 60 days.” said Geoff Dietrich, vice president of Dietrich & Associates. On the heels of the Federal Reserve’s announcement that it may be pulling back the reins on its bond buying program later this year, plan sponsors who have been monitoring their cost to exit plan liabilities are being rewarded with favorable conditions for executing partial, and even full, transfers, he added. “Plan sponsors are taking action. They’re pulling their chips off the table and cashing them in.”

The index provides a dynamically constructed, monthly directional data-point regarding the market conditions that affect settlement costs. Higher index values indicate a reduction in the settlement cost environment. The index was designed to provide pension stakeholders a mechanism for monitoring settlement market conditions, and to support effective pension plan governance and decision making.

More information about the index can be found at