What Is the Difference Between Defined Benefit and Defined Contribution

question 4

Essay

What is the difference between defined benefit and defined contribution retirement plans? Why are employers switching to defined contribution plans?

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Definitions:

Outputs

Goods and services of value to households.

Explicit Costs

Payments made directly to external parties as part of business operations, including salaries, rental fees, and the cost of goods.

Implicit Costs

are indirect expenses that do not involve a direct payment of money but represent a loss of opportunity to use resources elsewhere.

Normal Rate

A term that can refer to the typical or standard interest rate charged by lenders or expected returns on investments under normal conditions.