Question

Pension schemes are broadly classified by who bears the investment and longevity risk. Which of the following correctly describes a Defined Contribution pension scheme such as the National Pension System?

A The final benefit is fixed by formula, so the employer bears the investment risk
B Both the contribution and the final benefit are fixed in advance by the government
C The pension is paid from current tax revenue with no accumulation of funds
D The final benefit is linked only to last drawn salary and length of service
E Contributions are fixed, while the final benefit depends on investment returns, so the member bears the investment risk
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