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Research Insight - The Ultimate Forward Rate: Implications for Dutch Pension Plans - September 2012

Since the global financial crisis, Dutch pension plans have faced a dual challenge of disappointing asset returns and low interest rates, resulting in a decline of their funding ratios. This has led regulators to consider revised pension funding rules, including the possible introduction of the ultimate forward rate (UFR) in the construction of the yield curve used to discount pensions’ liabilities to their present value. In this Research Insight, we examine the implications for pension plans if regulators introduce the UFR and how it may impact stakeholders.