SIE Exam Question 688: Answer and Explanation

Question: 688

All but which of the following are characteristics of defined contribution plans?

• A. Employer contributions are defined.
• B. The employee assumes the risk of investment performance.
• C. The employer assumes the risk of pre-retirement inflation.
• D. Benefits cannot be provided for past service.

Correct Answer: C

Explanation:

In a defined contribution plan, employer contributions are defined, and benefits cannot be provided for past service. The employee assumes the risk of investment performance and pre-retirement inflation.