What are the three types of formulas used to determine pension benefits for defined benefit pension funds? Describe each.
Answer to relevant QuestionsWhat have the trends been for assets invested in defined benefit versus defined contribution pension funds in the last three decades?What are the major assets held by private pension funds in 1975 versus 2013? Explain the differences.An employer uses a final pay formula to determine retirement payouts to its employees. The annual payout is 3 percent of the average salary over the employees’ last three years of service times the total years employed. ...What is the difference between firm-specific credit risk and systemic credit risk? How can an FI alleviate firm-specific credit risk?How does a policy of matching the maturities of assets and liabilities work (a) to minimize interest rate risk and (b) against the asset-transformation function for FIs?
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