Li answers, “We realize the importance of incentives for employees to remain at our bank for at least four or five years. In addition to a defined contribution plan offered to all employees, Pure offers an additional deferred compensation plan to our technical employees, which is designed to mimic a defined benefit plan. It is a so-called non-qualified retirement plan, not eligible for favorable tax treatment but also not subject to the typical pension regulatory requirements.”
Li continues, “The plan’s benefit is defined as a percentage of each year’s compensation subject to a fixed 4% annual interest rate credit accumulating each year to a total lump sum. Pure, which has sufficient cash flow, has a policy of contributing an amount sufficient to cover accumulated vested plan benefits annually into a corporate trust. The plan’s trust portfolio is entirely composed of fixed-income securities. The employee gradually accrues rights to the full amount of the benefit from the beginning of Employment Years 3 through 6. Upon separation from employment, the employee may receive distribution of the entire vested benefit or leave it in the plan to accumulate further. Those who do not remain employed long enough to become fully vested forfeit some or all of the benefit. Pure uses these forfeited funds to reduce its future contributions to the plan’s trust. A majority of the participating technical employees remain at least five years, and we lose only about 20% of our staff within the first four years. The average tenure of our technical staff is 5.5 years. Exhibit 2 shows some of the characteristics of the portfolio backing the benefit.”
题 Q. Based on Li’s description of the deferred compensation plan, which of the following risks should she least likelyconsider significant?
- Plan design
- Workforce characteristics
- Correlation between the sponsor’s business and plan investments
这个题文中对应段落是什么意思,根本没读懂,求教