Final answer:
A pension plan entirely funded by the employer is known as a noncontributory plan. This type of plan is less common than in the past, with defined contribution plans like 401(k)s growing in prevalence due to advantages such as tax deferral and portability.
Step-by-step explanation:
When the employer bears the entire cost of a pension plan's costs, the plan is called a noncontributory plan. Unlike defined contribution plans such as 401(k)s and 403(b)s, where both the employer and employee contribute to the retirement account, noncontributory plans are entirely funded by the employer. These plans were more common in the past, but many have been replaced by defined contribution plans, which offer tax deferral, portability, and the potential to offset inflation costs through investment returns.
Pension insurance is also relevant in this context. It provides a safety net for retirement benefits through agencies like the Pension Benefit Guaranty Corporation, which steps in if a company cannot meet its pension obligations due to bankruptcy.