Question

Which of the following is the best example of a defined benefits plan?

O a set amount an employee will receive at retirement
O the wages and benefits an employee receives at a job
O the amount of pay an employee receives each hour
O the money the an employer puts into a retirement fund for each employee

Answer 1

The best example of a defined benefits plan is: "a set amount an employee will receive at retirement".

In a defined benefits plan, the employer promises to pay employees a specific, predetermined amount of money upon retirement. This amount is typically based on factors such as the employee's salary and years of service. The employer is responsible for contributing to and managing the retirement fund, and the employee receives a guaranteed amount of money upon retirement, regardless of how the fund performs.

The other options listed are not examples of defined benefits plans. The wages and benefits an employee receives at a job are part of their compensation package and may include retirement benefits, but they do not guarantee a specific amount of money at retirement. The amount of pay an employee receives each hour is their hourly wage and is not related to retirement benefits. The money an employer puts into a retirement fund for each employee may be part of a defined benefits plan, but it is not a complete plan in and of itself.