The IRS released Notice 2007-81, which provides guidance on the corporate bond yield curve and the segment rates required to compute the funding target and other items under Code section 430. This notice implements changes made by sections 101, 102, 111, 112, and 302 of the Pension Protection Act.
Even though it is only 9 pages long, and I have read it at least 20 times, I do not understand it yet. I called my favorite actuary today, and he doesn’t understand it yet either. He pointed me to a White Paper by the Dept. of Treasury’s Office of Economic Policy from February 7, 2005. It is “Creating a Corporate Bond Spot Yield Curve for Pension Discounting“. After October 15th, I plan on spending a couple of days working my way through Notice 2007-81. I hope working through a lot of examples and creating charts will shed a little bit of light on Notice 2007-81, which is beyond pension geek speak.
Technorati Tags: Pension Protection Act, ppa, 430, segment rates, bond yield curve, defined benefit, Notice 2007-81, ERISA
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