A pension plan that shares the risk for an underfunded plan between the employees and employer is knows as a ___ plan.

Question

Quizplus · Accepted Answer

A Target Benefit plan is a type of pension plan where the benefits provided to an employee upon retirement are based on a predetermined target, rather than a fixed benefit amount. The plan shares the risks and rewards between the employer and the employee, with the goal of creating a more sustainable pension plan. If the plan is underfunded, the benefits may be reduced for both the employer and the employee, which helps to mitigate the risk of the plan becoming insolvent or unsustainable.

A Pension Plan That Shares the Risk for an Underfunded