What Interest Rates Should Be Used for Present Value Calculations?
Suggested sources for interest rates range from the minimum guaranteed passbook savings rate to long-term Treasury bonds. However, the most popular rates are those promulgated by the Pension Benefit Guaranty Corporation which are based on a survey of annuity-writing insurance companies. More recently, the Retirement Protection Act called for using the interest rate on 30- year Treasury constant maturities in determining the lump sum payable to terminating plan participants who elect to forgo the annuity.
