Question

31 sylvester owns a recruitment agency and his employees are not covered under any group pension plan. in order to attract and retain employees, he wishes to introduce a group plan that meets his employees savings and investment needs. as the plan sponsor, sylvester is willing to make 100% contributions to the plan and prefers to invest in a plan that offers guaranteed income to its members after retirement. which of the following group plans is most suitable for sylvester?
a. dbpp
b. dpsp
c. dcpp
d. prpp

Explanation:

To determine the suitable group plan, we analyze each option:

• DBPP (Defined Benefit Pension Plan): The sponsor (Sylvester) makes contributions, and it provides a guaranteed income (pension) to members after retirement, matching Sylvester's preferences (100% contribution, guaranteed income).
• DPSP (Deferred Profit - Sharing Plan): Focuses on sharing profits, not guaranteed income, so not suitable.
• DCPP (Defined Contribution Pension Plan): Benefits depend on contributions and investment returns, no guaranteed income, so not suitable.
• PRPP (Pooled Registered Pension Plan): More for multiple employers, and doesn't emphasize guaranteed income as DBPP does.

So DBPP is the most suitable.

Answer:

a. DBPP