Which of the following is not true regarding defined contribution pension plans?

Question

Which of the following is not true regarding defined contribution pension plans?

The employer bears all of the investment risk.

Employees make regular contributions to the plan.

Benefits are directly related to the earnings of the funds investments.

Employers make regular contributions to the plan.

The employer bears all of the investment risk.

Employees make regular contributions to the plan.

Benefits are directly related to the earnings of the funds investments.

Employers make regular contributions to the plan.

Explanation / Answer

Answer:A.The employer bears all of the investment risk.

Employers that use defined benefit plans are assuming more risks that employers that use defined contribution pension plans.

B.Employees make regular contributions to the plan.- regular contribution is a must

C.Benefits are directly related to the earnings of the funds investments.- Very true

D.Employers make regular contributions to the plan.- Pension plans are contributions from both employers and employees.

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