KAP’s Interest Rate Updates For Employee Benefits as on 28 June 2024
June 28, 2024
Comments & Insights:
For more updates, the document refers readers to their website.
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Interest Rates Around the World:
Global recessionary uncertainty has resulted in persistent declines in interest rates.
Yield Comparisons:
Compared to 28-03-2024, rates for every tenure decreased, averaging a drop of 4 basis points (bps).
Compared to 30-06-2023, average decrease is 17 bps.
Impact on Obligation:
Decreases in yield will increase the present value of obligations and result in a loss due to changes in financial assumptions, assuming all other variables remain the same.
Impact on Asset:
A decrease in yield increases the fair value of plan assets whenever a company performs mark-to-market (MTM) valuation.
Insights
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Volatility in the Interest Rate March 2017 v/s June 2017
Employee Benefit Obligations are to be valued based on G-Sec rate of estimated term as prevalent at the end of the reporting period.
Topic to be covered: Volatility in the Interest Rate March 2017 v/s September 2017
Employee Benefit Obligations are to be valued based on G-Sec rate of estimated term asprevalent at the end of the reporting period.
K. A. Pandit's Social Security and Retirement Landscape Pulse Survey 2022
It is now nearly 2 years since the Code on Social Security, 2020 was enacted. We await a notification announcing the date when it shall come into force
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