In case of a defined benefit pension plan, the risk of

Solution

A Pension plan be either a defined benefit plan or a defined contribution plan. A defined Benefit plan is commonly referred to as a pension plan which gives guaranteed retirement benefits irrespective of the returns generated by the pension fund. This is type of pension plan is usually funded by employers for its employees with retirement pay-outs as per a set formula based on salary, employees age, tenure of service. As such, here the amount of pension on retirement is already known. And the risk of investment and planning is with the employer.