The Rising Influence of Rising Affluence

[DewDiligence]

(DE, MMM)—Rising long-term interest rates are good for companies with defined-benefit pension plans because they enable actuaries to use a higher discount rate when calculating the present value of pension obligations. This, in turn, reduces the current contributions companies have to make to their pension plans; DE and MMM are among the companies who stand to benefit the most from this effect:

http://www.bloomberg.com/news/2014-01-03/deere-3m-see-76-billion-pension-burden-easing-on-fed.html

Deere, the world’s largest maker of agricultural equipment, has projected pension expenses to be $150 million lower in 2014. 3M…is forecasting costs as low as $100 million, down from $534 million in 2012.