Smokescreen or saviour?

Plans to overhaul the liability discount rate for US corporate pension plans should provide some short-term funding relief. But the medium-term impact, along with the economic rationale, is far from clear. Christopher Jeffery reports

The decision by the US Treasury in July to push for a significant overhaul incompany-sponsored defined benefit pension plans – including a change fromthe current 30-year US Treasury discount rate for liabilities to a rate basedon investment-grade corporate bond yields – should offer significant fundingrelief for corporate America. US companies have faced major problems in fundingsuch plans due to the combination of low interest rates and weak equity markets.This has led to US defined benefit