Jenny's pension plan encourages her to contribute at least 5% of her annual salary in addition to the set amount that her company contributes. She is given choices regarding how the money is invested. When she retires, the amount she has available will depend on how much she invested herself, and the rate of return on the investments she chose. This pension plan could be classified as ________.

Question

Quizplus · Accepted Answer

Jenny's pension plan is classified as contributory because she is encouraged to contribute at least 5% of her salary in addition to her company's contribution. It is also defined contribution because the amount she will have available at retirement will depend on her contributions and the rate of return on her investments, rather than a set amount promised by the plan (defined benefit).

Jenny's Pension Plan Encourages Her to Contribute at Least 5