DB plan-advantages

CFA Level III
#1

What are advantages of db plan for employer. Do you have any ideas?

#2

Funds are portable before even client retiring

#3

employee* retiring

#4

accounts balances are portable-this is advantage of dc plan for employee

#5

  1. Longer time horizon in most cases

  2. Lower liquidity needs in most cases

  3. Could be higher risk tolerance as well depending on the make up

#6

and for employee? doesn’t have to make investment decisions? sth else?

#7

Advantages for emlpoyer = he doesnt have to submit 1 big lumpsum payment.

Advantages for employee = receives pmts after retirement, might be adjusted for inflation, he doesnt hold investment risk.

#8

portable: advantage for employee in DC and advantage for employer in DB since this option is not available. So it will affect positively the liquidity.

#9

Ok, I understand this in this way. In db plan employee cannot move his account. This is beneficial to employer, because it doesn’t trigger sudden liquidity need. Is it what you are reffering to?

#10

yepppp

#11

Ok, thanks!