Defined contribution retirement plans insulate employees from investment risks, which are instead borne by the company.

Question

Quizplus · Accepted Answer

Unlike defined benefit plans, defined contribution plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution. The advantage of such plans for employers is that they shift investment risk to employees and present fewer administrative challenges because there is no need to calculate payments based on age and service and no need to make payments to the PBGC.

Defined Contribution Retirement Plans Insulate Employees from Investment Risks, Which