NO.PZ2019100901000013
问题如下：
Fiona Heselwith is a 40-year-old US citizen who has accepted a job with Lyricul, LLC, a UK-based company. Her benefits package includes a retirement savings plan. The company offers both a defined benefit (DB) plan and a defined contribution (DC) plan but stipulates that employees must choose one plan and remain with that plan throughout their term of employment.
The DB plan is fully funded and provides full vesting after five years. The benefit formula for monthly payments upon retirement is calculated as follows:
Final monthly salary × Benefit percentage of 2% × Number of years of service
The final monthly salary is equal to average monthly earnings for the last five financial years immediately prior to the retirement date
The DC plan contributes 12% of annual salary into the plan each year and is also fully vested after five years. Lyricul offers its DC plan participants a series of life-cycle funds as investment choices. Heselwith could choose a fund with a target date matching her planned retirement date. She would be able to make additional contributions from her salary if she chooses
Discuss the features that Heselwith should consider in evaluating the two plans with respect to the following:
i. Benefit payments
ii. Contributions
iii. Shortfall risk
iv. Mortality/longevity risks
选项：
解释：
DB plan
benefit payment：the benefit payment is defined by the formula： Final monthly salary × Benefit percentage of 2% × Number of years of service. the benefit payment is contractual obligation by plan sponsor.
contributions: the plan sponsor contributes mostly to the pension asset. the emploees contribute a little.
shortfall risk: the pension plan asset cannnot meet the future contractual obligation.
mortality/longevity risk: the employees can not live longer than the average expected. they leave their asset for that alive. there is no longevity risk for DB plan
DC plan
benefit payment：the benefit payment is uncertain depending on the performance of investment. the employees bear investment risk
contributions: the employees contribute mostly to pension plan asset. the employer contributes little.
shortfall risk: the retirement goal cannot be achived due to not enough pension asset
mortality/longevity risk: the employees bears longevity risk.
