Considering the sorry state of state and local pensions, it's hardly surprising that last month the attractiveness of using annuity products to smooth out their liabilities saw its largest monthly increase since 2011, as reported by the Dietrich Pension Risk Transfer Index.

The index, which tracks the relative appeal of annuitizing pension liabilities, increased from June's value of 88.92 to 93.54 as of July 1. The index's current annuity discount rate proxy of 3.07 percent rose nearly 70 basis points since May. 

The 4.62 point gain was fueled by rising interest rates and pension funding levels. "We have witnessed many plan sponsors execute pension risk transfers over the last 60 days," said Geoff Dietrich, vice president of Dietrich & Associates. That reaction preceded Thursday's stock market rally after Fed Chairman Ben Bernanke's announcement that the Fed wouldn't be pulling back on its bond buying program in the foreseeable future.