Financial Risk Manager Part 1
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A compensation analyst at a consulting firm is comparing defined benefit pension plans and defined contribution pension plans offered by a company to its employees. The analyst prepares a detailed analysis of the structures and characteristics of these pension plans. Which of the following is correct regarding defined contribution pension plans?
A
Funds contributed to the pension plan are kept in separate accounts for each employee.
B
An employee's risk of not meeting a minimum retirement benefit level is assumed first by the employer, then by government-sponsored entities.
C
The company determines how the funds will be invested so that the maturity of the plan's assets matches the maturity of its obligations.
D
The present value of pension obligations is estimated each year to determine the employer's contribution.