Pleasant Company has established a pension plan for its employees that operates as follows: Each year, Pleasant Company places a fixed dollar amount in a pension fund for each employee. The funds are then invested. Upon retirement, each employee is entitled to the cash value of the funds that have been invested in his/her name. This arrangement is an example of which of the following?
A) Contingent program.
B) Deferred timing program.
C) Defined benefit program.
D) Defined contribution program.

Question

Quizplus · Accepted Answer

This arrangement is an example of a defined contribution program, where each employee receives a fixed dollar amount that is invested on their behalf, and the retirement benefit is based on how much the funds have accumulated over the years.

Pleasant Company Has Established a Pension Plan for Its Employees