FI 413 Lecture Notes - Lecture 20: Private Equity, Fixed Income, Cash Balance Plan
Document Summary
Pension funds provide retirement income for workers. Trustees: individuals or groups of people who hold the assets of the plan in trust, legally separate from the employer"s assets and oversees administration and management of the plan. This account earns interest: defined contribution (dc) the only defines part is the contribution does not promise you a specific benefit amount at retirement. Instead, you and/or your employer contribute money to your individual account in the plan. At retirement, you receive the balance in your account, reflecting the contributions, investment gains/losses, and any fees charged against your account. Defined benefit plans often count years of service in order to determine whether you have earned a benefit and also to calculate how much you will receive in benefits at retirement. Traditional db employees are usually required to leave the benefits with the retirement plan even after changing jobs.
