Characteristics of Defined Contribution Plans

During a recent analysis of employee compensation strategies at ABC Corporation, the management team examined its retirement benefits, specifically focusing on its defined contribution plan. A defined contribution plan is a type of retirement plan in which the employer, employee, or both make contributions to an individual account for the employee. These contributions are typically invested, and the retirement benefits depend on the amount contributed and the performance of the investments.

Which of the following statements accurately describes a key characteristic of defined contribution plans?