Cima F2 Exam Question No 23

Question No 23:

Defined contribution plans?

The pension payable on retirement depends on the contributions paid into the plan by the employee and the employer.

• The employer's contribution is usually a fixed percentage of the employee's salary. The employer has no further obligation after this amount is paid.
• Therefore, the annual cost to the employer is reasonably predictable.
• Defined contribution plans present few accounting problems.