Defined terms for the annuity market and lifetime income landscape.
A defined benefit pension as a risk pool is an employer-sponsored or multiemployer retirement arrangement in which benefits are defined by formula, funded through employer contributions and investment returns, with the sponsor absorbing investment, longevity, and other actuarial risks.
A defined contribution plan is an employer-sponsored retirement plan in which contributions are made to individual participant accounts, and each participant's retirement benefit is whatever the account produces from those contributions and investment returns.
Deflation risk is the risk that general price levels fall over time, which raises the real value of fixed nominal claims but strains the solvency of entities that owe those claims and complicates the pricing of new lifetime income arrangements.
