Posted by Brian Marks on 25 August 2001 at 09:39:23:
In Reply to: Yahoo news item on over-optimistic pension funding posted by Bob Maddock on 15 August 2001 at 14:22:27:
Thanks for the URL, Bob
10% return on investment certainly seems optimistic. However, everyone knows that a high return doesn't help the investor much if inflation is also high. The difference between these rates, the "real" rate of return, is more significant.
The real rate used by the IBM UK Trust for predicting forward from 1997 was 4.25%. There have been actuarial reports since but no figures from them have been released.
The Yahoo report does not say what inflation rate was assumed alongside the
10% return. It would be nice to know that. Perhaps our US viewers know what
document the Yahoo report was based on, and what it says about inflation?