A Company Can Save Up to 20% of Its Payroll

question 67

True/False

A company can save up to 20% of its payroll during lows in its business cycle by instituting a profit-sharing compensation program.

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Definitions:

Service Cost

The actuarial present value of benefits attributed by the pension plan formula to employee service during the period.

Pension Plan

A pension plan is a retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker's future benefit.

Overfunded

A situation where a pension plan's assets exceed its liabilities, indicating that there are more than enough funds to meet future obligations.

Underfunded

A term referring to insufficient funding to meet future obligations or commitments.