"The financial economics model for the discount rate may work beautifully for critics of public sector defined benefit plans when, as now, there is a very long period of very low interest rates. It can make it appear that plans are discounting future pension liabilities at too high a rate. Consequently, critics argue, basing the discount rate on the expected return on plan investments systematically understates the costs of funding public pension plans. However, what happens when interest rates are very high?"

MORE >>