The reduction to the value of a future benefit payment to reflect the time value of money, expressed as an annualized percentage. There are two differing rationales for the development of the discount rate: expected rate of return and market-based. The former is derived as the expected investment return on the assets available to pay benefits, and typically is determined based on the expected distribution of those assets by investment class. This approach is typically used for determining contribution rates, but may also be used to disclose the plan’s accrued liabilities. The latter is usually based on a yield curve of observable rates derived from fixed-income securities (typically bonds) available in the capital markets that have similar risk and payment characteristics to the future pension payments. For public pension plans, this is typically used not to determine contributions, but may be used to disclose the plan’s accrued liabilities.