Workers who change jobs may wind up with lower pension benefits at retirement than otherwise identical workers who stay with the same employer, even if the employers have defined benefit plans with the same final-pay benefit formula. This is referred to as
A) an accumulated benefit obligation.
B) an unfunded liability.
C) immunization.
D) indexation.
E) the portability problem.

Question

Quizplus · Accepted Answer

The portability problem refers to the issue where workers who change jobs may end up with lower pension benefits at retirement compared to those who stay with the same employer, even if the pension plans have the same final-pay benefit formula. This is because pension benefits often depend on factors like length of service with the employer, and changing jobs can reset these factors.

Workers Who Change Jobs May Wind Up with Lower Pension