What is the main feature of a defined contribution pension plan? \( \begin{array}{l}\text { All benefits are calculated according to a benefit formula } \\ \text { employee }\end{array} \) Contributions are due monthly and paid by the made only by the employee Contributions are made both by an employee and the employer

The main feature of a **defined contribution pension plan** is that **contributions are made by both the employee and the employer**. In a defined contribution plan: - **Both parties contribute** a specified amount or percentage of the employee's salary to the pension account. - The **future benefits** received by the employee depend on the **total contributions** made and the **investment performance** of those contributions. - There is **no guaranteed payout** at retirement; instead, the accumulated funds are used to provide retirement income. This contrasts with **defined benefit plans**, where the retirement benefits are calculated based on a specific formula, typically considering factors like salary history and years of service, and the employer bears the investment risk. **Key Point:** **Defined contribution pension plans are characterized by contributions from both employees and employers**, with retirement benefits based on the accumulated contributions and their investment performance. **Answer:** Defined contribution plans involve both employee and employer making contributions to the pension account.