Question

If a defined contribution pension cannot, for whatever reason, make good on their anticipated payments to retirees, the?

a) retirees are out of luck.
b) retirees get an extra payment from Social Security.
c) pensions are paid by the Pension Guaranty Trust Corporation.
d) retirees must sue their former employer.

Answer 1

If a defined contribution pension cannot make good on their anticipated payments to retirees, the pensions are paid by the Pension Guaranty Trust Corporation (c).

Step-by-step explanation:

If a defined contribution pension cannot make good on their anticipated payments to retirees, the pensions are paid by the Pension Guaranty Trust Corporation (c).

Defined contribution pensions, such as 401(k)s and 403(b)s, are different from traditional pensions because the employer contributes a fixed amount to the retiree's retirement account. The retiree then invests these funds, and the returns generated from these investments determine the amount of retirement income.