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Deflation Could Heat Up Pension War
When the targeting return was established in the high rate, then the pension fund manger tends to be greedy and will not so rational in making investment decisions. It will end up with suffering in achieving the target and brings the pension fund in to the unfunded position. In this situation, paying the liability in the future will be a problem. I agree that applying a low-risk discount rate is the rational way in investing of pension fund.— August 25, 2010 8:07 p.m.