Assumed interest rate


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Assumed interest rate

Rate of interest used by an insurance company to calculate the payout on an annuity contract.

Assumed Interest Rate

In annuities, a component of how monthly payments to the annuitant are determined. It is the minimum interest rate that the annuity may accrue while the annuitant makes payments on it; the annuity may perform better than the assumed interest rate depending on how it is invested, but the assumed interest rate serves as a bottom for how much the annuitant will receive when he/she begins to draw payments.
References in periodicals archive ?
As interest rates have declined, however, some governments have found that taxable municipal debt can be issued at rates below the pension plan's assumed interest rate, resulting in significant savings over the life of the bonds.
The MMD does provide such information as a company's previous annual contribution to a plan, the number of participants and the assumed interest rate.
A continuing fall in the assumed interest rate and an increase in interest and dividend income boosted the company's core operating profit.
As it stands now, INPRS calculates the ASA annuitizations at an assumed interest rate of 7.
because of the solid mortality rate margin and reduced negative interest rate spread owing to the lowered assumed interest rate as a result of provision of additional policy reserve.
People don't like variable annuitizations because the assumed interest rate (which sets the amount of the first payment and helps determine the size of future payments) is best set low to allow for the monthly payments to grow.
These complainants specifically object to three PERS policies: 1) the money-match program, an optional pension formula, rarely used before 1991, which unexpectedly became popular and increased employer obligations when the stock market rose in the late 1990s; 2) an 8 percent assumed interest rate for non-variable accounts; 3) outdated mortality tables (resulting in too high payments now that people live longer).