Sticky Note
Which of the following is not a characteristic of a defined-contribution plan?
مندرجہ ذیل میں سے کون سا شراکت کے منصوبے کی ایک خصوصیت نہیں ہے؟
  1. The benefit of gain or the risk of loss from the assets contributed to the pension fund are borne by the employee
  2. The employer's contribution each period is based on a formula
  3. The benefits to be received by employees are usually determined by an employee's three highest years of salary defined by the terms of the plan
  4. The accounting for a defined-contribution plan is straightforward and uncomplicated
Explanation
  • In a defined-benefit plan, retirement benefits are based on a formula considering factors like salary history (e.g., highest three years of salary).
  • A defined-contribution plan only specifies employer contributions, and benefits depend on investment performance, not salary history.
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