GPHR International Total Rewards 3

Question 1

Under the balance sheet approach, what is the primary purpose of the 'tax equalization' component?

Accepted Answer

To ensure the assignee pays no more and no less tax than they would have in their home country

Answer

Tax equalization ensures that an expatriate's tax burden is equivalent to what they would have borne in their home country, with the company paying any excess host-country taxes.

Question 2

A global HR manager is designing a long-term incentive plan (LTIP) for employees in multiple countries. Which challenge is most critical to address first?

Accepted Answer

Ensuring local securities and tax law compliance in each country

Answer

Equity plans must comply with local securities regulations and tax laws in every country where employees reside, as non-compliance can result in significant legal and financial penalties.

Question 3

Which of the following is a key characteristic of a defined benefit (DB) pension plan compared to a defined contribution (DC) plan in an international context?

Accepted Answer

The employer guarantees a specific retirement benefit in a DB plan

Answer

In a defined benefit plan, the employer promises a specific retirement income based on salary and service, bearing the investment and longevity risk.

Question 4

An international assignee is moving from a low-cost country to a high-cost country. Under the balance sheet approach, which allowance directly compensates for the higher day-to-day living expenses?

Accepted Answer

Cost-of-living allowance (COLA)

Answer

A cost-of-living allowance (COLA) compensates for the difference in day-to-day goods and services costs between the home and host countries.

Question 5

Which body publishes internationally recognized guidelines that influence the design of employee benefit programs across multiple countries?

Accepted Answer

International Labour Organization (ILO)

Answer

The ILO sets international labor standards including conventions on social security and benefits that influence national legislation and multinational benefit design.

GPHR - Global Professional in Human Resources Practice Test

GPHR - Global Professional in Human Resources Practice Test

GPHR International Total Rewards 3