Question

In a Defined contribution plan:

Select one:

a. When the employee retires the accumulated value of the contributions are usually converted to an annuity

b. Benefits are determined by a formula dependent on the final salary of the employee and the number of years in service

c. Contributions can only be invested in fixed income securities

d. None of the options.

Answer 1

In defined contribution plan the enployee have a choice to withdraw the accumulated amount at once or partially. Hence first statement is not correct

Benefit is dependent on the total accumulated value not on year of service or final salary. Hence statement is not correct

Contribution can be invested in other instrument as well as risk is undertaken by employee.

Hence none of the options are correct

Option d is answer