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Defined benefit pensions do not mind higher rates. They use 6-8% discount rates for their known cash liabilities and can nearly fully immunize their portfolios
by thoughtstheseus 3y ago
Defined benefit pensions do not mind higher rates. They use 6-8% discount rates for their known cash liabilities and can nearly fully immunize their portfolios with government bonds today. That’s maybe $1 trillion of capital converting into coupon bonds soonish.