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Settlement Rate
(redirected from Settlement Rates)

   Also found in: Encyclopedia 0.01 sec.
Settlement rate
The rate suggested in Financial Accounting Standards Board (FASB) 87 for discounting the obligations of a pension plan. The rate at which the pension benefits could be effectively settled if the company sponsoring the pension plan wishes to terminate its pension obligation.

Settlement Rate
The suggested way to calculate the net present value of a pension plan. The settlement rate is devised by the Financial Accounting Standards Board and is used by companies who wish to discontinue their pension plans. That is, a company may use the settlement rate to calculate lump sum payments to plan participants to relieve itself of the future liability of making payments on the pension over time.


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