Asked by Alexandre Al Mokhtari on May 31, 2024
Verified
From an employee's point of view,what advantage do defined contribution plans have over defined benefit plans?
A) The employer assumes the risk of investments.
B) They tend to be more portable.
C) They provide a higher pension for those who join the company later in life.
D) Risk is averaged over a large group of employees.
Defined Contribution Plans
A type of retirement savings plan where the amount of the employer's annual contribution is specified, with the future retirement benefits depending on the investment's performance.
Defined Benefit Plans
A type of pension plan where an employer promises a specified pension payment upon retirement, based on the employee's earnings history, tenure of service, and age.
Portable
Refers to something that is easily movable or transferable from one context or use to another.
- Analyze the distinctions between defined benefit and defined contribution pension plans, including their risks and portability.
Verified Answer
Learning Objectives
- Analyze the distinctions between defined benefit and defined contribution pension plans, including their risks and portability.
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