News that the Federal Reserve raised the federal funds rate for the first time in nearly ten years has so far had little affect on long-term, high-quality corporate bond rates, the key measurement to how sponsors of defined benefit plans price future liabilities.
An increase in overall interest rates may ultimately translate to an increase in yields on high-quality corporate bonds. That of course would be a welcomed development to sponsors of corporate pension plans.
But there is no automatic relationship between the fed funds rate and corporate bond rates, explained Alan Glickstein, a senior retirement consultant at Towers Watson.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
