For a DB fund with a neutral or positive funded status, the return requirement is the discount rate right? +a little extra if you want to lower future contributions.
What would be the required rate of return of an underfunded plan? Haven’t come accross this in my studies.
Have never seen this kind of question, difficult to calculate. Main responsibility is for the sponsor to close the gap, I don’t think the return requirement would be changed, just mention the above.
If it’s fully funded, the min required rate of return is the discount rate (which equates the PV of L to A).
It was a question in 2015 (Q1 B).
I would guess if there is a surplus, you would technically need a lower rate, but I don’t know if that’s correct for sure.
If the plan is underfunded/ fullfunded/ overfunded, the required nominal rate of return is higher than/equal to/ lower than the discount rate.
If they have given the inflation rate, the liability discount rate, and investment management expenses? What would be the target return requirement when the plan is A) overfunded and B) undefined?
You needn’t to use the inflation rate because the discount rate considers already the inflation.
For plan, I have never seen the investment management expense is given. But this can be on question relating to Foundation or Endowment.
For foundation/endowment, they never give you the discount rate.
Thank you, Pierre!
Thanks for the input all.
It surprises me that the material doesnt delve further into the dynamics of an underfunded status, seem most relevant. Perhaps it gets too complicated.
I don’t believe this is correct regarding the “lower than” comment - you never want to have a return requirement lower than the discount rate (even if you have a surplus). The text simply states that your return should equal the discount rate used to calculate the PV of liabilities, or slightly higher. If you saw this somewhere please guide me to the literature.
If underfunded, the Sponsor shouldn’t take on incremental risk in the portfolio to make up the difference, and rather should increase their contributions to the plan.
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There is a difference between desired return and required return. You can have a required return lower than the discount rate and a desired return equal to 200%. 
So, I still think the required return must be lower than the discount rate.
Whatever the PBO is discounted at (usually includes inflation figure unless otherwise noted). MGMT expenses and inflation - geometric return is relative for foundations and endowments typically.