1、CRS INSIGHT Prepared for Members and Committees of Congress INSIGHTINSIGHTi i Proposed Extension of Interest Rate Stabilization Percentages for Single Employer Plans August 31, 2021 Participants in defined benefit (DB) pension plans typically receive monthly payments from the plans when they retire.
2、 Employers that sponsor these plans set aside an amount each year to fund the benefits that will be paid. The benefit obligations are a plan liability spread out over many years in the future. Pension Plan Benefit Calculations A DB plans future benefits are spread out many years in the future and ar
3、e calculated and reported as present values (also called current values) through a process called discounting. Discounting requires the use of a specified interest rate and uses a formula to express benefits that are expected to be paid in a particular year in the future as a present value. Discount
4、ing is the inverse of compounding, which projects how much a dollar amount will be worth at a point in the future given a specified interest rate. The formula for calculating a present value is: The present value of a dollar amount is inversely related to both the interest rate (also called the disc
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