Originally Posted by
PilotWombat
That's not correct. If the plan is set up with a 5% return, it pays 5%. If the actual market return is higher, the excess earning go into a reserve fund. The next time the market return is less than 5%, the reserve fund is used to fill out the 5%. If there's a string of bad luck and the reserve fund runs out, the company is required to use operating cash to fill it out. Since this process happens every year, the program is always fully funded.
I should have been more specific. We are saying the same thing.
He is holding the MBCBP out as this vehicle which gets a guaranteed 5%. It’s not that at all. They target 5% as a growth rate. And in order to get that they will either withhold growth above 5% to use in the future, or take credit for that previous growth in terms of average rate.
If the market tanks, having your money in the MBCBP gains you nothing.