Cynics might argue that various accounting and solvency regulations that encourage pension funds to discount their liabilities by the government-bond yield have created a handy incentive for pension funds to invest in government bonds.

ECONOMIST: A tempting target for impoverished governments

Also using a lower discount rate would magnify pension liabilities and drive managers into an even more desperate hunt for yield, the author says.

FORBES: Want To Make That Public Pension Look Healthier? Burn The Cash

Operating under guidance from the Government Accounting Standards Board, public plans discount future liabilities at a rate equal to their expected return on assets--which, for the 59 plans in our study, was typically close to 8%.

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