SHRM Total Rewards & Compensation 3

Question 1

Which retirement plan type guarantees a specific monthly benefit at retirement based on salary and years of service?

Accepted Answer

Defined benefit plan

Answer

A defined benefit plan promises a predetermined retirement income calculated from factors like salary history and years of service.

Question 2

A gain sharing plan like Scanlon or Rucker distributes financial rewards based on:

Accepted Answer

Measurable improvements in organizational productivity or cost savings

Answer

Gain sharing programs reward employees collectively for measurable efficiency or cost improvements over a baseline period.

Question 3

What is the primary purpose of conducting a salary survey?

Accepted Answer

To gather external market data on competitive pay rates

Answer

Salary surveys collect data on what other organizations pay for similar jobs, enabling competitive market-based pay decisions.

Question 4

Under ERISA, which fiduciary duty requires plan administrators to act solely in the interest of plan participants and beneficiaries?

Accepted Answer

Duty of loyalty

Answer

ERISA's duty of loyalty (exclusive benefit rule) requires fiduciaries to act solely in the interest of plan participants and beneficiaries.

Question 5

An employee receives stock options with a four-year cliff vesting schedule. What does this mean?

Accepted Answer

All options vest at once after four years of continuous service

Answer

Cliff vesting means no ownership is earned until the full vesting period is completed, at which point 100% vests at once.

SHRM - Society for Human Resource Management Practice Test