DB Pension Plans-Interest Rates

I am not a pension plan expert, but I have some knowledge of the methods used to determine the solvency of a Defined Benefit Pension Plan. The large underfunding problem of many DB plans has been created, in a large part, by the current extremely low interest rates. The required funding of a DB plan is determined by calculating the sum of the "present values" of the future benefits of each member of the fund. The low interest rates result in the required funding being very high. The solution to the problem is to raise interest rates by approximately 5%.

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