Defined Benefit inflation

From Q1 of 2015 morning, why is inflation not included as target? DB plan is not inflation adjusted?

Depends, if there are no active participants, and the benefis are fixed, then you don’t adjust for inflation.

i think its more that the plan is fully funded and the pv of liabilities is the mv of the assets so the discount rate is the required return.

If it’s a liability mimicking plan, yes. The nominal discount rate would be used as the return objective.

Remember the actuarial discount rate takes inflation into account so you don’t need to add inflation to the discount rate

the required rate given by the actuarial department ( liablities) is also nominal :slight_smile:

Thanks guys