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DB Fund Question

+1 vote
asked Nov 1, 2018 in BUS 4027W - Actuarial Risk Management by anonymous

For a DB fund, does the employer promise a lump sum value at retirement which then buys an annuity - so the pensioner would still be subject to the risk of annuity rates. Or does the DB fund promise a monthly pension payment amount?

1 Answer

+2 votes
answered Nov 1, 2018 by Rowan (4,010 points)

The employer promises the monthly pensions amount, so there is no annuity risk to the pensioner.