LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client's employer plan is a defined contribution pension rather than a group registered plan. The review should note that:
- AThe employer guarantees a formula benefit at retirement based on service and final average earnings
- The member bears the investment risk and the funds are locked in under pension legislation
- CThe plan creates no pension adjustment, so the member's registered room is unaffected
- DThe member may withdraw the balance at any time, subject only to withholding tax
Correct answer: B) The member bears the investment risk and the funds are locked in under pension legislation
The member chooses among the plan's options and keeps whatever the account is worth, and pension law restricts access to the funds until retirement.
Why the other options are wrong
- AA formula benefit describes a defined benefit plan.
- CDefined contribution plans do generate a pension adjustment.
- DLocked-in funds cannot simply be withdrawn.
Exam tip
Defined contribution: member's risk, locked-in money.
Common mistake
Confusing a defined contribution pension with a group registered plan.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.