Application of the Spot Rate Approach to US Pension Expense Calculations – An Investment Perspective
What is the Spot Rate Approach? Since 2015, many companies using U.S. GAAP accounting have disclosed a change to a “spot rate” approach for determining the service cost and interest cost components of their pension expense. This article examines the pension accounting model through an investment lens to help clarify the application of this new approach.
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Discusses recent interest rate movements and the effects on retirement plans.