Have low interest rates affected the contribution decisions of public pension funds in the United States?

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Abstract/Contents

Abstract: Low interest rates increase the liabilities of public pension funds by raising the costs of paying fixed future benefits. In response to this it is expected that contributions would increase. In this paper, it is found that public pension funds in the United States are not accounting for interest rates when making contribution decisions. Instead, it seems as though the duration of the pension fund liabilities on which zero coupon treasury yield curve rates are calculated is of greater importance. Public pension funds are seemingly concerned relatively more by the length of their amortization period to catch up on missed contributions, with increases in contributions occurring for low durations and decreases in contributions occurring for high durations.

Author	Shiva, Ajeya
Thesis advisor	Rauh, Joshua D.

Subject	Public pensions, Interest rates, Pension contributions, Duration of pension liabilities
Genre	Text
Genre	Thesis

DOI	https://doi.org/10.25740/pd933hq3800
Location	https://purl.stanford.edu/pd933hq3800

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Preferred citation: Shiva, A. (2022). Have low interest rates affected the contribution decisions of public pension funds in the United States?. Stanford Digital Repository. Available at https://purl.stanford.edu/pd933hq3800

Stanford University, Department of Economics, Honors Theses

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