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    Question

    Under the defined contribution plan, the amount of

    pension on retirement is dependent upon which of the following factors?
    A Age and salary Correct Answer Incorrect Answer
    B Contribution and investment return Correct Answer Incorrect Answer
    C Salary and investment return Correct Answer Incorrect Answer
    D Contribution and age Correct Answer Incorrect Answer
    E Contribution and years of service Correct Answer Incorrect Answer

    Solution

    A Pension plan be either a defined benefit plan or a defined contribution plan. A defined contribution plan is one in which the pension depends on the contributions made and the return generated on the investment made of those contributions. In this plan, the contribution made for the pension fund is defined or fixed. For example NPS or EPF where a fixed amount is contributed every month from the salary.

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