Understanding Defined Benefit Plans

Very Easy Employee Compensation Defined Benefit Plans

ABC Corporation sponsors a defined benefit plan for its employees. Under this plan, the company promises to pay certain retirement benefits based on employees’ years of service and final salary. In the context of defined benefit plans, which of the following statements is true?

Employees are responsible for investment risks and returns.

The financial responsibility for providing retirement benefits lies primarily with the employer.

Defined benefit plans guarantee a fixed contribution amount each year.

Hint

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