Pension Protection Act 2006, who does it benefit
Is the new rule for calculating lumo sum pension benefits more beneficial for emploees or employers?
If we are to calculate based on the CCB rate and it is so close to the 30 year treasury rate, why did they bother?
Any Thoughts?
Permalink Submitted by Daniel Berglund on Wed, 2008-05-14 15:52
It is my understanding that lump-sum pensions will start using the higher corporate bond rate for calculating benefits. They will also be required to use an updated actuarial chart (they had been using one from the 1980s). The net effect will be that the higher interest rate combined with longer life expectancies will benefit the employer (smaller lump-sum) if you are talking about a younger employee. If you are talking about an older employee (say, over 60), the employee will come out ahead (larger lump-sum).