Answer: defined contribution pension plans only.

## Explanation **Correct Answer: B - defined contribution pension plans only.** **Key Concepts:** 1. **Defined Benefit (DB) Pension Plans:** - The employer/sponsor bears the investment risk - The employer guarantees a specific retirement benefit amount based on factors like salary history and years of service - Investment performance affects the employer's funding requirements, not the individual's benefits - If investments perform poorly, the employer must contribute more to meet the promised benefits 2. **Defined Contribution (DC) Pension Plans:** - The individual employee/investor bears the investment risk - The employer contributes a defined amount (e.g., 401(k) matching contributions) - The retirement benefit depends on investment performance of the individual's account - Poor investment performance directly reduces the individual's retirement benefits - Individuals make investment choices and bear the consequences **Why not A or C:** - **A is incorrect** because in defined benefit plans, the employer/sponsor bears the investment risk, not the individual. - **C is incorrect** because defined benefit plans do not transfer investment risk to individuals. **Additional Context:** - In defined contribution plans, individuals are responsible for their own investment decisions and outcomes - The shift from DB to DC plans in many countries has transferred investment risk from employers to employees - This question tests understanding of risk allocation in different pension plan structures

Author: LeetQuiz .