1. Defined-benefit versus defined contribution pension plans Consider two pension plans for Megan, who works for Hydropower Corporation, and Raphael, who works for WindErgy company. Plan A Megan will receive 50% of her average annual salary during the five years in which her salary was highest if she stays with Hydropower at least 15 years, and 85% if she stays with Hydropower at least 25 years. Plan B WindErgy contributes 5% every month to Raphael's retirement plan, and Raphael also contributes 5% from his paycheck each pay period. Which of the following pension plans is a defined-benefit plan? Plan A Plan B Which of the following is the key characteristic that distinguishes between defined contribution and defined-benefit pension plans? A defined contribution plan allows employees to decide how to invest the money set aside for their retirement A defined-benefit plan requires the employer to contribute funds every pay period that then can be invested until the employee's retirement. O A defined-benefit plan allows employees to decide how to invest the money set aside for their retirement. A defined contribution plan allows employees access to money any time before retirement, for any reason, with no penalty. Which of the following statements about a defined-contribution plan are accurate? Check all that apply. The sponsoring firm's main responsibility is its contributions to the fund. Employees can designate what proportions of their money should be allocated to particular types of investments. All employees ultimately will have the same account balance at the time of retirement. Employees can access money any time free of charge before retirement