At the end of each fiscal year, corporate pension plan sponsors must select a discount rate to use in valuing the liabilities of their pension plan for GAAP accounting purposes. As a result, the choice of discount rates will affect the balance sheet and credit rating.
When FAS 158 became effective December 15, 2006, Ryan ALM created a series of discount rates in conformity to then FAS 158 (now ASC 715). Ryan ALM provides four distinct discount rate yield curves that best conform to GAAP requirements.
We believe our discount rates consistently provide higher rates that are in conformity with ASC 715, well documented, and validated by auditors. Because our ASC 715 rates are usually higher than other discount rates, it should enhance financial statements and credit ratings. Ryan ALM has produced a white paper that highlights our discount rates and why they stand apart from other industry offerings.
The Ryan ALM ASC 715 discount rates consistently demonstrate a higher yield than most other discount rates. Historically, the yield difference is as follows: Top 1/3 = 21 to 84 basis points, Above Median = 11 to 62 basis points, and the Full Curve = -1 to 27 basis points.
Based on Above Median discount rates, for every $1 billion in projected liability benefit payments the reduction in present value could be $11 million to $62 million. That isn’t chump change! Let us help you save precious financial resources during these challenging times.