In a private defined benefit pension plan the ________ bears the investment risk, and in a private defined contribution plan the ________ bears the investment risk.

A) plan sponsor; employee
B) employee; plan sponsor
C) U.S. government; plan sponsor
D) plan sponsor; U.S. government

Defined Benefit Pension

A type of pension plan where an employer promises a specified monthly benefit upon retirement, which is predetermined by a formula based on the employee's earnings history, tenure of service, and age.

Defined Contribution Plan

A retirement plan where contributions are defined, but the eventual payout depends on the investment's success.

Investment Risk

The possibility that an investment's actual return will differ from the expected return, including the potential loss of some or all of the original investment.