Asked by Keely Messer on Jun 09, 2024
Verified
From a funding obligation perspective,why do employers prefer to use a defined contribution pension plan?
A) Liability is limited to the amount placed into the plan.
B) Actuarial predictions are made easier.
C) Pensioners are guaranteed a fixed sum of money.
D) This avoids "underfunded" plans.
Defined Contribution Pension Plan
A retirement plan where the amount contributed by employers or employees is specified, but the future benefit amount is not guaranteed, depending on investment performance.
Funding Obligation
Refers to the requirement for an entity to provide financial resources for a project, debt, or other commitment as agreed upon.
Underfunded Plans
Retirement or pension plans that lack enough assets to cover all present and future obligations.
- Comprehend the effects that defined benefit and defined contribution plans have on employers and employees.
- Examine how the design and financing of benefit plans affect organizational expenses and liabilities.
Verified Answer
Learning Objectives
- Comprehend the effects that defined benefit and defined contribution plans have on employers and employees.
- Examine how the design and financing of benefit plans affect organizational expenses and liabilities.
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