Goldman Sachs Asset Management (GSAM) has issued a Q&A document about the effects on defined benefit plans of the U.S. corporate tax reforms, written by Mike Moran, Chief Pensions Strategist at GSAM.
Titled, Does a Borrow-to-Fund and De-Risk Strategy Still Make Sense?, the document answers questions such as:
- Interest rates may be rising. Corporate tax rates may be falling. Foreign-held cash may be more accessible. Does it still make sense for corporate DB plan sponsors to consider a borrow-to-fund and de-risk strategy?
- Long-term interest rates have risen about 100 bps since summer 2016. If interest rates are expected to continue to rise, should a plan sponsor just wait for that to occur, which would help to cure deficits?