Respuesta :
When an employer makes all of the contributions to the pension plan, the pension plan is classified as non-contributory.
What is a noncontributory pension plan?
- A noncontributory plan is any pension or other type of benefit plan that is entirely paid for by the employer.
- There are no payments required of plan participants. Employers frequently set up noncontributory life insurance plans for their employees, though the total amount of coverage is typically low.
- Noncontributory plans are especially beneficial for low-income employees who might not be able to afford the associated benefits otherwise.
- In a non-contributory or defined benefit plan, the employer promises to pay an amount in the future based on the pay rate and number of years with the company.
- The final pension payout is determined by the employee's age, health, and the number of years before retirement.
- One of the advantages of a non-contributory plan is that a certain amount is guaranteed to the retiree when he reaches the age of 65. The benefits of the plan can be accumulated quickly.
To know more about noncontributory pension plan, refer to:
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