IFSE Institute Life License Qualification Program (LLQP) LLQP Question # 78 Topic 8 Discussion
LLQP Exam Topic 8 Question 78 Discussion:
Question #: 78
Topic #: 8
Sasha is an employee at PranaTech. The company offers all employees a pension plan. PranaTech must contribute into the plan, but employee contributions are not mandatory. Sasha chooses where his funds will be invested.
Sasha’s plan allows him to choose his own investments, and the company is required to contribute, while his own contributions are optional. This structure is indicative of a Defined Contribution Pension Plan (DCPP). In a DCPP, the employer contributes a fixed amount to the employee’s retirement plan, and employees often have control over how their funds are invested. Employee contributions are typically voluntary, as outlined by LLQP guidelines on pension plans.
Options B, C, and D do not match because Defined Benefit Plans do not provide investment choice, DPSPs usually have discretionary employer contributions, and group RRSPs are not pension plans and typically involve mandatory employee contributions.
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