The Effect of interest on pension contributions

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      <subfield code="a">In discussions of pension plan costs the actuary often needs to de scribe the effect on contributions of a variation in the interest rate. The rule of thumb that an increase of 1 of 1 per cent in the interest rate will result in a 6 per cent reduction in contributions is believed to be widely used by actuaries and others. That this "rule" is not applicable to all situations is obvious considering that under pay-as-you-go funding interest has no effect on contributions.</subfield>
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