Penbridge Advisors, a pension risk transfer advisory firm, has launched its Pension Risk Transfer index, which measures the typical premium an insurance company would charge a generic defined benefit plan for a group annuity buyout.
The index is calculated by discounting a typical defined benefit plan's cash flows at a single interest rate. A typical plan is defined as a plan with $25 million in assets and a liability mix consisting of about 80% retirees and 20% vested participants who have yet to retire, and a duration near 10, which would be higher at lower interest rates and vice versa.
Steve Keating, co-founder and prinicipal, did not return a phone call by press time.
The April 2015 PRT index is $33,717,385, a 13.3% premium, over the PPA spot basis. That basis is a calculation of funded status based on calculations mandated by the Pension Protection Act of 2006.
The company published a guide to the index on Penbridge's website.