Hi all,
I have seen this topic posted before but am still unsure about how to answer the question.
I have read in some places that the required return of a DB Pension will ALWAYS be equal to the discount rate, but then in a past AM exam session (I think 2012) the answer specifies that because the PBO = value of plan assets that the required return is equal to the discount rate.
My question is - what would the required return be if the pension was overfunded or under funded?
Would we ever be required to calculate a required return that WASN’T equal to the discount rate based on an over funded or underfunded pension?