<p>This is two questions.</p>
<blockquote>
<p>How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds?</p>
</blockquote>
<p>Defined benefit pension funds have a discount rate and assumed returns to determine the required contributions. The exact mechanism for determining these depends upon the jurisdiction, but they are normally related to market interest rates, possibly on an averaged fashion.  Lower discount rates - regardless of whether they are positive or negative - implies greater contributions needed for the same level of benefits. This makes defined benefits more “expensive.”</p>
<blockquote>
<p>What could be winning investment strategies for pension funds in a negative interest rate environment?</p>
</blockquote>
<p>This can only be answered as an opinion, which is not in line with guidelines.</p>

CC BY-SA 4.0
2021-01-23T19:25:47.417Z
2021-01-23T19:25:47.417Z
Brian Romanchuk
<p>How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds?</p>
<p>What could be winning investment strategies for pension funds in a negative interest rate environment?</p>

<interest-rate><investment>
Negative Interest Rates and Pension Funds
Analyst_11
# Negative Interest Rates and Pension Funds

(Asked by: username_0 on 2021-01-23)

How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds?

What could be winning investment strategies for pension funds in a negative interest rate environment?

**Tags:** interest-rate, investment

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## 1 answers

### Answer by username_1 on 2021-01-23. Score: 2 | Accepted answer

This is two questions.

> How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds?

Defined benefit pension funds have a discount rate and assumed returns to determine the required contributions. The exact mechanism for determining these depends upon the jurisdiction, but they are normally related to market interest rates, possibly on an averaged fashion. Lower discount rates - regardless of whether they are positive or negative - implies greater contributions needed for the same level of benefits. This makes defined benefits more “expensive.”

> What could be winning investment strategies for pension funds in a negative interest rate environment?

This can only be answered as an opinion, which is not in line with guidelines.


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