Question

8. Investment Risk and Actuarial Risk are borne by the employer under______
A Defined Benefit plan
B Defined Contribution Plan
D None of A, B and C
C Multi-Employer Plan​

Answer 1

Answer:

I thought 3 is correct

Explanation:

but I am not sure bro

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Answer 2

Answer:

Option B - Defined contribution plan is the correct answer.

Explanation:

• A defined contribution (DC) plan, such as a 401(k) or 403(b), is a tax-deferred retirement plan in which employees contribute a set amount or a percentage of their earnings to an account that will finance their retirement.
• As an extra benefit, the sponsoring employer may match a percentage of employee contributions.
• These programmes restrict when and how employees can make money from their accounts without suffering fines.
• Employees who participate in defined contribution (DC) retirement plans can invest pre-tax cash in the capital markets, which will grow tax-deferred until retirement.
• Companies and organisations regularly use 401(k) and 403(b) plans to encourage their employees to save for retirement.
• Defined contribution (DC) plans are in contrast to defined benefit (DB) pensions, which are guaranteed by the employer.
• A DC plan offers no assurances, and membership is both optional and self-directed.

Hence, investment risk and actuarial risk are borne by the employer under a defined contribution plan.

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