NO.PZ202301040900001201
问题如下：
R-Cubed is a private foundation
dedicated to the advancement of resource recycling and environmental solutions.
Although the foundation is headquartered in Cambridge, Massachusetts, its
headquarters’ staff is minimal. Most of its employees are located in its
offices in Tokyo, Japan, and Dublin, Ireland.
R-Cubed maintains
two separate and distinct retirement plans for its workers: a traditional
defined benefit pension plan for its Japanese staff and a defined contribution
plan for its American and Irish staffs. A summary of high-level characteristics
for each plan are provided in Exhibit 1. The defined benefit pension plan is
frozen, with no new participants permitted to join. R-Cubed has shifted all
future hiring to its Dublin office.
R-Cubed
contributes 7% of compensation to the accounts of new participants in the
defined contribution plan, increasing its contribution to 11% of compensation
for employees who have been with the company for at least five years. Employees
are permitted to contribute up to 16% of their compensation to the plan on a
voluntary basis.
(1) Contrast the time horizon and liquidity constraints of the R-Cubed pension and defined contribution plans.
选项：
解释：
Time Horizon
While both retirement plans can be considered long-term, the time horizon of the defined benefit pension plan is shorter than that of the defined contribution plan because of its frozen status.
No new participants will be joining the pension plan and it will be wound down over time as existing participants and their beneficiaries die.
Liquidity Constraints
The defined benefit pension plan has a greater liquidity constraint due to its older workforce and the fact that the benefit will be paid out over the indeterminate lives of the participants and their beneficiaries.
The possibility of early retirement and lump-sum payouts amplifies this situation.
Further, the pension plan’s benefits are indexed to inflation, increasing the magnitude of benefit payouts going forward.
The defined benefit pension plan is frozen, with no new participants permitted to join. The DB has higher liquidity constraints because there is no employee contribution to the DB plan. But the DB plan still needs to pay the benefit payment to the retired participants.