RET 101: DB and DC designs allocate different risks
Defined-benefit and defined-contribution designs make different promises. Compare who bears investment, longevity and contribution risk, while recognising that specific plan provisions can change the allocation.
Original practice scenario
For an original sponsor decision, a DB promise specifies a benefit formula; a DC design specifies contributions to an account. Explain how uncertain investment returns affect the sponsor and member under each. Add adequacy and behavioural considerations before recommending a design.
Study check
Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.