Question

Book is Human Resource Management | 16th Edition by Sean Valentine/Patricia Meglich/Robert L. Mathis/John H. Jackson

6._____Sandra is an HR assistant. Sandra participates in her company’s pension plan. After having worked for eight years, Sandra has been vested by her company. This indicates that: a) When Sandra retires, she will receive the amounts contributed by the company and herself. b) Sandra can now transfer her pension balances to a new employer’s plan if she moves to a new company. c) Sandra will receive the funds her firm contributed to the pension plan only if she is a member of the firm while retiring. d) None of the above

Answer 1

6. Here, option (b) is the correct answer

A pension plan refers to a retirement plan that requires an employer to make contributions which is set aside for the future benefits of an employer. The given example represents a defined-contribution plan wherein the company is also contributing to the pension plan opted by the employee. This means that the employee would get the befit of both.

In the given case, since it is given that the employer has completed eight years in the firm, this means that now the employer has the right to transfer the pension policy to a new firm and continue contributing and receiving its benefits at a later stage. But, the contributions made by the parent company would differ and the new contributions would depend on the policies of the new firm.