Total Rewards & Compensation Flashcards

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

Answer: Defined benefit plan

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

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

Answer: Measurable improvements in organizational productivity or cost savings

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

What is the primary purpose of conducting a salary survey?

Answer: To gather external market data on competitive pay rates

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

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

Answer: Duty of loyalty

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

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

Answer: All options vest at once after four years of continuous service

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

Which concept describes the perception that one's pay is fair compared to coworkers doing similar work within the same organization?

Answer: Internal equity

Internal equity refers to fairness in pay relationships among employees within the same organization based on job value and contribution.

What is the purpose of a Section 125 Cafeteria Plan?

Answer: To allow employees to pay for certain benefits with pre-tax dollars

A Section 125 Cafeteria Plan lets employees use pre-tax salary dollars to pay for qualified benefits like health insurance and FSAs.