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This type is mostly used due to its easiness, law risk, and non-expensiveness but in the other hand, it needs more skills for employees in order to make good investment decisions.
In defined benefit plan there is no contribution involved, instead the company will specify the benefit that will be paid to the employees after retirement if certain conditions met. Such conditions can be 30 years working at the company and/or at least 60 years age at retirement. To illustrate further we took Al-Diwan as an example.
To illustrate the retirement products Al-Diwan provides number of concepts will be explained:
• Period required in order to be vested...
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