Active Accrued (2012 morning paper Question 6 Part E)

In the question, they mentioned Retirees, Deferred and Future Wage Inflation all use the real rate bonds. How about the active accrued? Nominal bonds? How do we decide which is mimicked by norminal bond verse the real rate bond?

Thank you!

It depends on the benefits (plan features) that the DB plan has promised to its active members: - Nominal bonds for active accrued benefits not linked to inflation - Real return bonds for active accrued benefits linked to inflation

Good to know. Thank you for the help!

You’re very welcome :slight_smile: