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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