AFM391 Study Guide - Final Guide: Defined Benefit Pension Plan, Pension, Balance Sheet

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Identify whether each of the following descriptions of pension plans describes defined contribution plans, defined benefit plans, or both: must use a pension trust to hold the plan"s assets. Both: transfers risk from retirees to plan sponsors. Dbp: allows employees to contribute to a pension plan. Dbp: provides a guaranteed amount of retirement income. Dbp: provides a guaranteed amount of plan funding. A pension plan promise to pay ,000 at the end of each year for 15 years of the retirement period. Erik works for the government of alberta and is covered by a defined benefit pension plan. Erik just turned 45 years old, and expects to retire at age 65. At that time, the pension plan will pay erik annual pension payments equa l to 3% of his final year"s salary for each year of services rendered. The pension payments will continue until erik"s death, which actuaries expect to be when he turns 85 years old.

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