Part III: Short Essay (10 Points)

Explain the difference between a defined benefit and defined contribution pension plan. Then examine the City of Chicago's Police and Firefighters' Pension Funds. Explain what type of plan (benefit or contribution) they are and what are the problems they currently face (specifically, what is their funding ratio as of December 2020). How did they get into the situation they find themselves today?

https://chipabf.org/fund-reports/#mission_state December 2020 reports. (Actuarial Valuation)

https://www.fabf.org/FinanceInfo.html

Use the December 2020 reports. (Actuarial Valuation)