Deck 12: Designing Indirect Pay Plans

Question 1

Which of the following plans provides a guaranteed level of income at retirement?

A) defined contribution plan
B) tax deferred plan
C) defined benefit plan
D) registered retirement savings plan

Answer 1

C

Question 2

Research shows that one of the results of a company having a pension plan is that employees retire later.

Answer 2

False

Question 3

Which of the following is a company pension plan that guarantees a certain benefit to retirees regardless of market conditions?

A) defined benefit plan
B) money purchase plan
C) defined contribution plan
D) Canada Pension Plan

Answer 3

A

Question 4

Which of the following benefits must employers participate in on behalf of their employees?

A) workers' compensation benefits
B) supplemental unemployment benefits
C) outplacement services
D) paid leaves for jury duty

Question 5

Examples of employee services include the following: employee assistance programs,recreational programs,and product/service discounts.

Question 6

A force promoting flexible benefits plans is the increasing diversity of the work force.

Question 7

It seems more firms are deciding to offer which of the following benefits?

A) group RRSPs and life insurance
B) formal pension plans
C) supplemental medical and dental
D) employment insurance

Question 8

Mandatory benefits are those components of indirect pay that the employer makes compulsory for all employees.

Question 9

Defined benefits plans are intended to provide guaranteed income from retirement to death.

Question 10

A force hindering flexible benefits is loss of economies of scale in the purchase of benefits.

Question 11

In developing a benefits system,the first issue is determining the structure of each benefit.

Question 12

An important question to ask in determining the structure of each benefit is "who will pay for it?"

Question 13

Some benefits consultants are starting to turn against flexible benefit plans because they believe they serve neither the employee nor the employer well.

Question 14

Research shows that satisfaction with a benefits plan declines as employees learn more about it.

Question 15

Which of the following is not a government regulated benefit?

A) outplacement services
B) rest breaks
C) vacation time
D) statutory holidays

Question 16

Which of the following benefits is not included under "employee services?"

A) use of company vehicle
B) wellness and recreational
C) child care/elder care
D) work-life balance

Question 17

What determines the amount the employer must contribute to government-provided employee benefits?

A) pre-tax company profits
B) total cost of benefits system
C) total cash compensation received by an employee
D) total cost of benefit premiums

Question 18

As a member of the company's defined benefit plan,employees receive a pension based on 1 percent of the average of their best three years earnings for each year of service. What will be your annual pension if you retire after 30 years of service and have averaged $50,000 per year during your three best years?

A) $28,000
B) $15,000
C) $25,000
D) it depends on how much money is in the investment trust

Question 19

Which of the following benefits are increasing most rapidly in cost?

A) formal pension plans and supplemental medical
B) supplemental employment insurance and outplacement services
C) parental and educational leaves
D) tuition reimbursements and mortgage subsidies

Question 20

After mandatory benefits,what are the costliest items in most company benefits packages?

A) disability, life, and accident insurance plans
B) supplemental health and dental insurance plans
C) pension and retirement plans
D) parental and sabbatical leaves

Question 21

Which of the following benefits does not receive favourable tax treatment?

A) registered pension plans
B) accidental death insurance
C) employer-provided long-term disability
D) dental insurance

Question 22

Which of the following may help to improve employee comprehension of their benefits?

A) employee handbooks
B) periodic newsletters
C) computer-based technology
D) annual pension coverage statements

Question 23

Which of the following questions is not one of the four main issues in deciding the structure of each benefit?

A) What will the benefit provide?
B) Who will pay for it?
C) Who is eligible to receive it?
D) Is it tax-favoured or not?

Question 24

Which of the following is not an issue in establishing an indirect pay system?

A) determining the role of employee performance in establishing benefits
B) choosing a process for plan design
C) choosing the benefits system and specific benefits
D) determining the structure of each benefit

Question 25

Which of the following statements is true of employee assistance programs?

A) They are most likely to be used in classical organizations
B) They are used by a majority of major Canadian firms
C) They are only effective in high stress workplaces
D) They are often regarded as an invasion of employee privacy

Question 26

Which is not one of the considerations in deciding whether to include a particular benefit in indirect pay?

A) whether it contributes to the objectives of indirect pay
B) whether or not there is a union
C) whether it is valued by employees
D) whether it adds much net value to the compensation package

Question 27

Providing which of the following benefits will reinforce your strong commitment to helping your employees balance work and personal activities?

A) group banking package discount rates
B) paid time off for community service
C) subsidized meals and free hot drinks
D) computer purchase plan

Question 28

Which of the following is not a main issue that wellness programs typically deal with?

A) individual health practices
B) organizational health issues
C) physical work environment
D) problem employees

Question 29

Which of the following identifies the first issue in developing an effective benefit system?

A) determining the tax implications
B) examining the compensation cost structure of the organization
C) establishing the administration process
D) determining the role of indirect pay in compensation strategy

Question 30

Which of the following terms is used to describe a benefits plan that provides a standard set of benefits?

A) uniform benefits plan
B) hybrid benefits plan
C) cafeteria type benefits plan
D) fixed benefits plan

Question 31

Which of the following is not a source of unexpected cost for defined benefit plans?

A) work force diversity
B) inflation
C) negative market returns
D) life expectancy increases

Question 32

From an employee's point of view,what advantage do defined contribution plans have over defined benefit plans?

A) the employer assumes the risk of investments
B) tend to be more portable
C) provides a higher pension for those who join the company later in life
D) risk is averaged over a large group of employees

Question 33

From a funding obligation perspective,why do employers prefer to use a defined contribution pension plan?

A) Liability is limited to the amount placed into the plan.
B) Actuarial predictions are made easier.
C) Pensioners are guaranteed a fixed sum of money.
D) This avoids "underfunded" plans.

Question 34

Which of the following is not a valid reason to deter the adoption of flexible benefit plans?

A) high administrative costs
B) lack of consultant expertise
C) possible loss of economies of scale
D) confusion and poor decision making among employees

Question 35

Which one of the following items is included in virtually all benefit plans?

A) child care
B) parental leave
C) health care spending accounts
D) life and accident insurance

Question 36

Which of the following is not a possible reason for implementing flexible benefit plans?

A) cutting benefit costs
B) more diverse work force
C) union demands
D) shift employee perspective away from an entitlement approach

Question 37

Which of the following plans allows you to tailor your benefit plan to suit your needs and even trade off benefits that are not important to you?

A) health care spending accounts
B) simplified flex plan
C) flexible benefits plan
D) fixed benefits plan

Question 38

Offering free onsite massages during peak times,fitness club memberships,and internet stations in lounge areas are examples of which type of employee services?

A) work-life balance
B) outplacement services
C) employee assistance programs
D) wellness and recreational

Question 39

Which of the following aspects of the compensation system is considered to be the most technically complex?

A) determining the base pay structure
B) designing the job evaluation system
C) establishing external equity
D) designing the benefits system

Question 40

Which of the following plans is comparable to a group RRSP?

A) mandatory benefits
B) a defined benefit plan
C) a defined contribution plan
D) a tax-advantaged type of performance pay

Question 41

Discuss the pros and cons of flexible vs.fixed benefits plans.

Question 42

Describe the main issues in designing the benefits system.

Question 43

Describe how a health care spending account works.

Question 44

Identify and briefly explain the most common and important employee services.

Question 45

Identify and briefly explain the types of pension plans discussed in the text.