CFA® Level I question of the day
20 October 2026 · Portfolio Management
In a defined benefit pension plan, who bears the risk that retirees live longer than expected?
Show the answer and explanation
Answer: B. The plan sponsor
The sponsor promises a specified benefit for life and must fund it, so longevity risk, like investment risk, sits with the sponsor.
- A. The employees - In a DB plan the benefit is promised for life, so longer lives cost the sponsor, not the retiree.
- C. The plan's asset manager - The manager invests the assets but does not guarantee the promised benefits.
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Notes, formulas and a worked question for every learning outcome are on the Portfolio Management page, with the whole CFA Level I syllabus alongside.