September 12, 2019
The Double Whammy Threatening Corporate Pension Plans
Low rates may reduce asset returns and lower discount rates, hiking liabilities. Lower interest rates may be great if you’re tapping the bond market. Not so much if you’re trying to fund a corporate pension plan. Returns on assets fall. William Warlick at Fitch Ratings said the sudden dive in interest rates in July and August—10-year Treasuries fell below 2%, and by early September yielded about 1.5%—potentially creates a “double whammy.” The first whammy is that yields remaining low for an…