Valuation of Pension obligations in a continuing low interest environment in the Euro-Zone-impact and measures

Since the global financial crisis interest rates in the Euro-Zone areturning down and areat ahistoric low level companies have to disclose pension obligations in their financial statements. Valuation principles for pension obligations demand under IFRS and German GAAP that the liabilities have tobediscoun­ ted. Melting interest rates result in continuously increasing pension obligations. Thus, KPis and credit rating of companies are impacted. The article describes the impact of decreasing yields on pension obligations under different accounting regulations. First taken measures of the German legislation enforced inJanuary 2016 to reduce the burden of the growing pension obligation by changing the valuation principles are analysed. Tue article also details the impact of a low interest environment on KPis and creditrating.