Which of the following statements characterizes defined benefit plans?

Question

Quizplus · Accepted Answer

Defined benefit plans provide retirement benefits based on a formula, typically taking into account factors such as an employee's years of service and salary at retirement. These plans can be complex in construction and often raise accounting issues for employers, particularly when it comes to calculating liabilities and managing fund assets. However, retirement benefits do not depend on how well pension fund assets have been managed - this is more characteristic of defined contribution plans such as 401(k)s. Therefore, B is the correct answer.

Which of the Following Statements Characterizes Defined Benefit Plans