Distinguish Between Defined Benefit and Accumulation Superannuation Schemes

question 77

Essay

Distinguish between defined benefit and accumulation superannuation schemes.Clearly explain which party bears the investment risk in each arrangement.

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Definitions:

Holding Period

The length of time an investment is held before being sold, which can affect the capital gains tax owed upon sale.

FMV

Fair Market Value, the price at which property would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell.

Distribution

The payment of dividends or assets to shareholders or partners from a corporation, partnership, or another type of entity.

Partnership

A type of business structure where two or more people share ownership, as well as the responsibility for managing the business and the income or losses it generates.