Problem 1: What is the difference between inflation and the 'time value of money'?
Problem 2: Please explain what issues relating to the concept of the 'time value of money' might be important when choosing between a defined benefit or an accumulation super fund.
Problem 3: Are all defined benefits calculated the same way? I have been given an equation of:
Retirement Benefit = benefit salary x length of membership x lump sum factor x average service fraction
Also, am I correct in thinking that if I opted for the defined benefit fund, I would be forgoing potential gains in investment earnings? Or, does the defined benefit fund provide an equal opportunity for capital growth? Please explain using an example to illustrate.
700 words plus references.