MTHEL131 Lecture Notes - Lecture 11: Canada Pension Plan, Pension, Stock Market
12 Apr 2016
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Types of pension plans: 1) rpp"s (registered pension plans) 2 broad types: db plans (deined beneit plans, the beneit at reirement is deined by formula, ex: amount employee receives each month, formula involves: years of service * income * factor , deining a person"s income: Person has worked at place for 30 years. Started geing at beginning, went up to 80000, ended at 70000. Can do it be career average = 40000. Average of best 3 years = 80000: factor 1%, 1. 5%, 2% Factor is set number: susan, jane, tammy, set to receive 48000, 30000, 12000 per year respecively, stock market drops right before they all reire. It has no efect on the pension they receive: the stock market dropping is a risk taken by employers. Called investment risk: the stock market is volaile, the risk that the employee will live a long life is longevity risk, very popular for large employers.
