A statewide pension plan exists for all local governments in a certain state.The provisions of the plan indicate that each qualifying retiree receive 2% multiplied by the number of years active employment multiplied by the average salary for the past four years of service.The government calculates the actuarial liability on a statewide basis,not by individual government.The plan would be known as a:

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The plan is a multiple-employer plan because it covers all local governments in a certain state. It is also a defined benefit plan because the benefit formula is specified in the plan. However, it is a cost-sharing plan because the actuarial liability is calculated on a statewide basis, not by individual government. Choice (A) is incorrect because there is no mention of an agency plan. Choice (B) is incorrect because the plan is a defined benefit plan, not a defined contribution plan. Choice (D) is incorrect because the plan covers multiple employers, not just one.

A Statewide Pension Plan Exists for All Local Governments in a Certain