Could someone please give a definition of "cost neutral"? We were told in class that if a DC fund is considered to be cost neutral then the pre-retirement mortality is to be ignored.

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So it would be best to clarify this with your lecture, but from what I understand cost neutral is the same as actuarially neutral.

This means that in the case of pre-retirement mortality, the death benefit and all associated costs will be the same as the accumulated fund value, and therefore no allowance for death benefits need to be made in the contributions. I hope that clarifies the definition of cost neutral for you.

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