All of the following are characteristics of defined contribution pension plans EXCEPT:
Understand the Problem
The question is asking which option does not represent a characteristic of defined contribution pension plans. We will evaluate each option to determine its relevance to defined contribution plans.
Answer
Defined contribution plans do not pay a specific amount to retirees each month.
The final answer is that defined contribution plans do not pay a specific amount to retirees each month.
Answer for screen readers
The final answer is that defined contribution plans do not pay a specific amount to retirees each month.
More Information
Defined contribution plans involve individual accounts where both employees and employers may contribute. The retirement benefit depends on investment performance, unlike defined benefit plans, which promise a certain payout.
Tips
A common mistake is confusing defined contribution plans with defined benefit plans, which do guarantee specific monthly payments.
Sources
- Defined Contribution Plans: Chegg - chegg.com
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