Which statement correctly identifies a benefit or a drawback of a company offering its employees a pension plan compared to a retirement savings program with some employer matching of savings?
A) A company's obligation to an employee's retirement savings plan is met completely by the time the employee retires. A company maintains an annual obligation to an employee's pension until the former employee dies.
B) A company's obligation to an employee's pension is met completely by the time the employee retires. A company maintains an annual obligation to an employee's retirement savings plan until the former employee dies.
C) Pensions typically increase annually with cost-of-living-adjustments (COLAs), while the payout of a retirement savings plan will never have an annual increase.
D) A company can delay its costs for retirement savings until an employee retires, but it must make annual contributions to a pension fund during an employee's working years.

Question

Quizplus · Accepted Answer

With a pension plan, the company is obligated to pay the employee a set amount of money for life, even after the employee retires, whereas with a retirement savings program, the company's obligation is met once the employee retires and uses the savings. This means the company has a long-term financial obligation with a pension plan that does not exist with a retirement savings program.

Which Statement Correctly Identifies a Benefit or a Drawback of a Company