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 this year. The index’s current annuity discount rate proxy is up 5 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.