An employer would likely prefer this kind of pension plan:

Question

Quizplus · Accepted Answer

An employer would likely prefer a defined contribution plan as it is less expensive and puts less financial risk on the employer. With a defined contribution plan, the employer contributes a set amount to each employee's retirement account, but the amount of benefits the employee receives at retirement depends on the investment performance of the account. This shifts the risk and responsibility for retirement savings from the employer to the employee. Defined benefit plans require the employer to pay a defined amount of benefits to employees at retirement, regardless of the investment performance of the plan, which can be costly for the employer. Hybrid plans combine features of both defined benefit and defined contribution plans, but may still involve significant financial risk for the employer.

An Employer Would Likely Prefer This Kind of Pension Plan