Defined-benefit instead of defined-contribution

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Janet has been in a defined-contribution pension scheme since she was 40 and will retire in one year's time at age 66. Her salary is currently £62,000. Throughout her enrolment in the scheme, she has paid in 4% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of £9000 per year.

- Why does the drawdown option become less attractive if Janet expects to stay in good health, and live a long time into retirement?

-Comment on the certainty or otherwise over the size of Janet's pension, when she reaches retirement age, if her pension scheme had been defined-benefit instead of defined-contribution?

Reference no: EM132973224

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