Which of the following statements with respect to pension plan categories is correct?

Question

Quizplus · Accepted Answer

Past Service Pension Adjustments (PSPA) can only arise when the plan is a defined benefit plan. PSPA is a type of financing method used to fund the additional benefits accrued by employees for past periods of service. It is not applicable to defined contribution plans where benefits are based on contributions made by the employer and/or employee. Option A is incorrect because pension adjustment reversals could arise in both DB and DC plans. Option B is incorrect because a pension plan where the benefit is based on employer and employee contributions is a defined contribution plan. Option C is incorrect because a plan in which the benefit is based on employer contributions is not necessarily a defined benefit plan.

Which of the Following Statements with Respect to Pension Plan