Many defined benefit pension plans have a target rate of return on investment that is equal to the ________.

Question

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Defined benefit pension plans typically have an assumed actuarial rate of return, which is the target rate of return on investment that the plan aims to achieve in order to meet its future payment obligations to plan participants. This rate is usually set based on a combination of the plan's asset allocation strategy, historical investment performance, and expected future market conditions. It is not necessarily tied to the firm's return on equity or the estimated stock market return, although those factors may be considered in setting the target rate of return. The economic inflation rate may also be a factor in setting the assumed rate of return, but it is not necessarily equal to the target rate of return.

Many Defined Benefit Pension Plans Have a Target Rate of Return