LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A defined contribution (DC) pension plan provides:
- AA guaranteed income for life based on the member's final average earnings and years of service
- BGovernment funding that tops up the member's contributions each year
- An account balance from contributions and returns, with the member bearing investment risk
- DA formula pension that the employer must fund regardless of investment results
Correct answer: C) An account balance from contributions and returns, with the member bearing investment risk
DC members must make investment and decumulation decisions — where an agent's advice adds value.
Why the other options are wrong
- ANo income guarantee exists in a DC plan.
- BFunding comes from employer and employee, not government.
- DFormulas are defined benefit features.
Exam tip
DC: balance, member's risk, matures to LIF/annuity.
Common mistake
Assuming a DC plan will pay a set pension.
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.