Asked by Alexandre Al Mokhtari on May 31, 2024

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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.
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ZK
Zybrea KnightJun 03, 2024
Final Answer :
B
Explanation :
Defined contribution plans are more portable, meaning that the employee can take their contributions with them if they leave the company. In contrast, defined benefit plans are typically tied to a specific employer and may not transfer to a new job.