I have worked as an actuary for most of my life, and as such have been involved, in one way or another, with thousands of qualified retirement plans over the years. “Qualified” means that the plans are approved by the IRS and subject to all of the rules and regulations of the IRS and the Department of Labor (DOL) and if it is a defined benefit plan, because it is from the trenches. When interest rates are high, everything costs more; this is supposed to help curtail reckless spending and inflation.

But does it? When people who are rich or well-off want something they just buy it, period, end of story. The average person is a bit more cautious when buying things that have gone up in price.

They may forego the item and wait until costs come down, or, if they really want it, put it on their credit card, even though that may cost them another 25% or more. Typically the two most expensive things that we buy are houses and cars, items that are subject to excessive interest rates that are heavily influenced by the Federal Reserve. In my case, I did a re-fi of my mortgage when rates were low, locking it in at 2.85%.

If I was quicker, I could have gotten a lower rate. Today I would have to pay at least 6.5% which would generate a payment that is at least 50% higher. I think we can all agree that the higher interests have made it much more difficult for the average family to buy a house.

When interest rates are not manipulated, retirement plans will benefit as follows: defined contribution plans, including 401(K) plans, will generally benefit from lower interest rates because they usually end up generating higher account balances that are based on investments that go up in value when interest rates are low. In the case of DB plans, lower interest rates permit employers to make higher tax-deductible contributions while providing higher lump sum distributions to retirees. I can remember when the IRS, in its infinite wisdom, demanded that small DB plans utilize an interest assumption of at least 8%, regardless of what the plan was actually earning.

Forced interest rates generally result in the disruption of long-range planning, because retirement plans rely best on reasonable constants as opposed to variables or unknowns. The raising of interest rates for the general population does not dampen inflation but only adds to it. Large corporations simply factor in the increased cost of interest into their product or service and pass it on to the consumer who accepts it, albeit grudgingly, which only fuels the cycle of inflation.

Smaller corporations many times will end up absorbing the increase in costs resulting in other issues. The largest component of our current wave of inflation is that of the energy sector, which is at least 50% and in some communities as high as 100%, while at the same time experiencing record high profits as well as having a direct effect on every other facet of our economy. It seems to me that the best way to control inflation would be to deal with the worst culprit, not to punish the consumer.

From an actuarial point of view, interest rates that are low have in fact benefited almost everyone and all industries except those that are in the business of lending money. Stan Weisleder is a published author and host of the radio program, “The View From Over Here.”