Do we remove from the portfolio at the present value or in full? I’ve seen cases for both, but in an individual IPS where they dont even list the risk-free rate I guess would assume simplicity and take out the entire lump sum. Sorry if this has already been discussed.
I think the biggest factor is whether or not they provide the Rf rate - if so, I always pull out the discounted value, assuming you would invest the cash in Tbills until the liability is due.
I agree, if the expense is: -certain (not potential) -more than a year away -AND they provide the risk free rate Then I will discount the present value.
I hit that one in Schweser #2 and was surprised they bothered (only made the return calc off by .01…close enough for rounding differences, imo).