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Dietrich Pension Risk Transfer Index shoots up

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A key measure of the relative attractiveness of annuitizing pension liabilities surged in June.

The Dietrich Pension Risk Transfer Index, published by Dietrich & Associates jumped from 85.81 in May to 88.92 this month.

The burst in the index is typical for the season due to a consistent (and often increasing) rate environment. The index’s current annuity discount rate proxy of 2.69 percent was 30 basis points higher than May’s.

As predicted, with the onset of summer, opportunities arise due to the optimal rate environment. Plan sponsors — who have been waiting to conduct transactions — begin to mobilize due to price reductions; this month they have gone down considerably — 3 to 5 percent in many cases.

With the index encouraging plan sponsors to keep an eye on pension risk transfer costs over the last few months, sponsors are now poised to execute.