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Why pension governance matters

NOVEMBER 12, 2018 | ROYAL BANK OF CANADA

“When other asset classes with higher return assumptions are used to set discount rates, the long-term plan liabilities are effectively lowered, despite the broad challenge posed by an environment of low-interest rates. These higher return assumptions can result in public plans adopting riskier portfolio composition and strategies to address any funding shortfalls, as both politicians and labour representatives are unwilling to resolve shortfalls by increasing contributions or reducing plan benefits.”

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