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CIMAPRA19-F01-1 Exam - Topic 1 Question 110 Discussion

Which of the following is a characteristic of a defined contribution post-employment benefit scheme?
A) The amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.
B) The employer would make additional contributions into the scheme if the actuary predicted a shortfall in the funds available to pay post-employment benefits.
C) The amount of the post-employment benefits paid to former employees is determined at the date of their retirement using a predefined formula.
D) The employer may take a contributions holiday and stop paying contributions for a period, if the scheme's assets appear to be more than are required to meet the scheme's obligations.

CIMAPRA19-F01-1 Exam - Topic 1 Question 110 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 110
Topic #: 1
[All CIMAPRA19-F01-1 Questions]

Which of the following is a characteristic of a defined contribution post-employment benefit scheme?

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Suggested Answer: A

by Susy at Apr 07, 2025, 04:59 AM

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Mona
7 months ago
D is interesting, but I thought contributions were mandatory.
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Nikita
7 months ago
Wait, can employers really just stop contributing? Sounds risky.
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Gary
7 months ago
Totally agree, that's how defined contribution works!
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Omer
8 months ago
B is misleading; that's more of a defined benefit feature.
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Raymon
8 months ago
A is correct! Benefits depend on investment performance.
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Milly
8 months ago
D seems plausible too, but I can't recall if contributions holidays are common in defined contribution schemes. I need to think this through.
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Franchesca
8 months ago
I feel like C is more about defined benefit plans since they use a formula to determine benefits at retirement.
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Regenia
8 months ago
I'm a bit unsure about B; I remember something about employers needing to cover shortfalls, but I thought that was more typical of defined benefit schemes.
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Lorean
9 months ago
I think option A sounds right because in a defined contribution scheme, the benefits really do depend on investment performance.
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Caitlin
9 months ago
I'm leaning towards A as well, but I want to double-check the other options just to be sure I'm not missing anything.
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Brandon
9 months ago
I'm pretty confident that A is the right answer here. The defined contribution scheme puts the investment risk on the employees, so the benefits they receive depend on how well the investments do.
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Cassi
9 months ago
Okay, I've got it now. The key characteristic of a defined contribution scheme is that the benefits paid out are based on the investment performance, not a predefined formula. So A is the correct answer.
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Jaleesa
9 months ago
Hmm, I'm a bit confused on this one. I'll need to think it through carefully to make sure I understand the differences between the defined contribution and defined benefit schemes.
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Portia
10 months ago
I think the answer is A. The amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.
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Loise
1 year ago
B seems like the most logical choice to me. The employer has to step in if the funds are insufficient. I'd rather not depend on the whims of the stock market, thank you very much.
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Avery
1 year ago
B seems like the most logical choice to me. The employer has to step in if the funds are insufficient. I'd rather not depend on the whims of the stock market, thank you very much.
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Tenesha
1 year ago
B) The employer would make additional contributions into the scheme if the actuary predicted a shortfall in the funds available to pay post-employment benefits.
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Rashad
1 year ago
A) The amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.
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Patria
1 year ago
Ha! D is clearly the funniest option. The employer can just take a 'contributions holiday' if the assets are sufficient. Like a paid vacation, but for the company!
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Avery
1 year ago
C is the answer, no doubt about it. The benefits are determined by a predefined formula, not investment performance. This exam is a piece of cake!
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Ryann
1 year ago
That's a valid point, but I still think A) is more likely based on the characteristics of defined contribution schemes.
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Pete
1 year ago
I disagree, I believe the answer is C) because benefits should be predetermined.
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Ryann
1 year ago
I think the answer is A) because it makes sense for benefits to depend on investments.
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Charlene
1 year ago
Hmm, I thought option B was the right one. The employer has to cover any shortfall in the funds, not the employees. What a drag!
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Jamal
1 year ago
User 2: Oh, I see. I thought the employer had to cover any shortfall in the funds. Thanks for clarifying!
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Denny
1 year ago
User 1: I think option A is correct. The benefits depend on how well the investments perform.
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Gerald
1 year ago
Option A is the correct answer. The amount of benefits paid depends on the scheme's investment performance, not a predefined formula.
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Junita
1 year ago
Exactly, the employer's contributions are based on the scheme's investments.
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Jamey
1 year ago
So, the benefits are not determined by a predefined formula, but by the investment performance.
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Tonja
1 year ago
I agree, that's the characteristic of a defined contribution post-employment benefit scheme.
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Luis
1 year ago
I think the correct answer is A) The amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.
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Louvenia
1 year ago
Exactly, the employer's contributions are based on the scheme's investments.
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Gerald
1 year ago
So, the benefits are not determined by a predefined formula, but by the investment performance.
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Hoa
1 year ago
I agree, that's the characteristic of a defined contribution post-employment benefit scheme.
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Gwenn
1 year ago
I think the correct answer is A) The amount of the post-employment benefits paid to former employees depends on how well the scheme's investments have performed.
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