Interest rate risk and Pension cost: Difference between pages

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The risk associated with a change in interest rates.
The accounting cost to a company of providing pension benefits in a given time period as shown in the financial statements, which may be more or less than actual payments made into the scheme or schemes involved over the same period.
 
 
This may take several forms in the treasury context.
 
For example, and depending on the direction of the change:
*Increasing interest cost
*Falling interest income
*Changing market value of debt, or of pension liabilities
*Differences in competitiveness
*The changing nature of a market when interest rates change
*Secondary effects, especially potentially adverse effects, resulting from any of the primary effects above. For example, potential breaches of interest cover covenants.
 
 
Sometimes written 'interest-rate risk'.
 


== See also ==
== See also ==
* [[Asset-liability management]]
* [[Generally accepted accounting principles]]
* [[Double-whammy]]
* [[Pension]]
* [[Exposure]]
* [[Fair value interest rate risk]]
* [[Financial covenant]]
* [[Guide to risk management]]
* [[Interest cover]]
* [[Interest rate]]
* [[IRHP]]
* [[IRRBB]]
* [[Matching]]
* [[Pipeline risk]]
* [[Portfolio hedging]]
* [[Risk-free rate of return]]
* [[Shock]]
* [[Time bins]]
 
 
=== Other resources ===
 
[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]


[[Category:Manage_risks]]
[[Category:Manage_risks]]

Revision as of 22:29, 28 June 2013

The accounting cost to a company of providing pension benefits in a given time period as shown in the financial statements, which may be more or less than actual payments made into the scheme or schemes involved over the same period.

See also