81) Malcolm is interviewing for a new job and he is evaluating the quality of the pension plans
offered for each company he is considering. One company offers a pension plan in which the
company will make all contributions to the plan and will base his pension benefit on a formula
linked to his pay at the time of retirement and the number of years he works for the firm. This
pension plan could be classified as a ________.
A) non-contributory, defined contribution
B) contributory, defined benefit
C) non-contributory, defined benefit
D) contributory, qualified plan
AACSB: Application of knowledge
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Application
82) Jenny’s pension plan encourages her to contribute at least 5% of her annual salary in addition
to the set amount that her company contributes. She is given choices regarding how the money is
invested. When she retires, the amount she has available will depend on how much she invested
herself, and the rate of return on the investments she chose. This pension plan would be
classified as ________.
A) qualified, defined benefit
B) non-contributory, defined benefit
C) contributory, defined contribution
D) contributory, defined benefit
AACSB: Application of knowledge
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Application
31
83) Craig was born in 1961. According to the Social Security Act, what is Craig’s full retirement
age?
A) 62
B) 65
C) 67
D) 70
AACSB: Application of knowledge
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Application
84) All of the following are Social Security benefits EXCEPT ________.
A) death benefits
B) disability payments
C) retirement benefits
D) defined contribution benefits
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
32
85) Portability makes it easier for employees who leave a firm prior to retirement to ________.
A) switch to defined contribution pension plans
B) take their pension funds with them
C) designate a new pension beneficiary
D) invest their pensions in 401(k) plans
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
86) A 401(k) plan is best described as a ________.
A) defined contribution pension plan
B) defined benefit pension plan
C) health savings account
D) golden parachute
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
87) What is the main problem associated with defined benefits plans?
A) lack of employer matching
B) lack of portability
C) highly regulated
D) highly taxed
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
33
88) Which of the following is considered a hybrid of defined benefit and defined contribution
plans?
A) ESOP
B) 401(k) plan
C) flexible savings
D) cash balance plan
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
89) Which term refers to the money that an employer and employee have placed in the
employee’s pension fund that cannot be forfeited for any reason?
A) thrift plans
B) vested funds
C) stock options
D) cash balance funds
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
90) With graded vesting, the period for acquiring a non-forfeitable right in employer matching
contributions is 3 years.
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Concept
34
91) In a brief essay, describe the three classifications that apply to basic pension plans.
AACSB: Application of knowledge
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Application
92) Why do some employers encourage early retirement? What are some potential problems
associated with early retirement programs? How can firms avoid such problems?
AACSB: Analytical Thinking
Chapter: 11
LO: 11.5: Describe the main retirement benefits.
Skill: Critical Thinking
35
93) Which of the following provides services such as financial counseling, child care referrals,
and adoption assistance?
A) long-term pension plan
B) work-life benefit service
C) benefit management system
D) employee assistance program
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
94) The primary purpose of ________ is to enable employees to balance work and family
obligations.
A) automated benefits systems
B) work-life benefits
C) cafeteria plans
D) pooled paid leave banks
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
36
95) Furman, an automotive parts manufacturer, employs nearly 800 workers in its Dallas, Texas
facility. Furman has always offered its employees health and dental insurance as well as legally
required benefits such as unemployment insurance and workers’ compensation. Furman’s top
executives are considering the idea of offering employees a flexible benefits plan. Which of the
following, if true, best supports the argument that Furman should offer employees a flexible
benefits plan?
A) Some Furman employees express interest in vision insurance, while other workers never
enroll for dental insurance.
B) Furman outsources its employee benefits program, and employees must file claims with the
plan’s administrator.
C) Some Furman employees prefer to build their work days around a core of midday hours rather
than work from 9 to 5.
D) Furman established a pooled paid leave bank to reduce the number of employee absences.
AACSB: Reflective thinking
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Critical Thinking
96) Kim works a 4-day workweek that consists of 10-hour days. Kim’s employer most likely
offers ________.
A) job sharing
B) flextime schedules
C) telecommuting options
D) compressed workweeks
AACSB: Application of knowledge
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Application
37
97) Why do some companies use employee leasing firms?
A) Large companies experience shifts in employee demand.
B) Small businesses are able to obtain affordable health insurance.
C) Businesses save on health care costs by hiring independent contractors.
D) Companies reduce unemployment insurance premiums by outsourcing.
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
98) When employers offer domestic partner benefits to employees, it means that employees’
same-sex domestic partners are eligible to receive the same benefits as do the husband, wife, or
legal dependent of one of the firm’s employees.
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
99) The firm for which Rob works offers employees counseling services, a credit union, and a
physical fitness facility, which are all considered personal service benefits.
AACSB: Application of knowledge
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Application
38
100) Studies indicate that employee assistance programs help reduce absenteeism among
employees with family problems and illnesses.
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
101) Providing employees with iPhones, laptops, or other tools they need to get their jobs done
in any location is known as workplace flexibility.
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
102) Howard’s firm allows employees to assemble their own benefits packages from a variety of
benefits options, so Howard’s firm most likely offers a cafeteria plan.
AACSB: Application of knowledge
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Application
103) Flexible benefits plans enable employees to spend their benefits allowances as they desire
and to opt out of certain benefits, such as disability and unemployment insurance.
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Concept
39
104) Why are family-friendly benefits increasingly valuable to employees? What are some
examples of family-friendly benefits?
AACSB: Reflective thinking
Chapter: 11
LO: 11.6: List and discuss the popular personal services and family-friendly benefits.
Skill: Application
105) As a strategy to increase productivity, employee engagement, and better customer service,
organizations are paying higher than competitors’ wages.
Chapter: 11
LO: 11.7: Explain how to use benefits to improve engagement, productivity, and performance.
Skill: Concept
40