COMMERCE 2FA3 Lecture Notes - Lecture 7: Pension, Risk Aversion
21 Sep 2016
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Document Summary
Personal finance: in a db pension, benefit payments are made to retirees according to a formula. Here, the employer is responsible for making sure the employee gets the amount of money they are owed, the employee does not have to do anything. For example, you might receive 1. 5% of the final average of your salary over the last five years times the number of years of service up to maximum of 35 years. They put money in the pension plan and the employer matches how much you put in. For example, a lot of people think highly of their investing ability. They believe they can time the market or pick the next hot stock. When the market is rising, most stocks will do well, including those that they pick, and most people will. Saturday, april 9, 2016 take that as a confirmation of their acumen.
