Certified Plan Sponsor Professional (CPSP) Practice Exam

What does a Service Level Agreement (SLA) establish between a plan sponsor and a plan service provider?

1. Specific performance levels for plan services

2. Financial penalties for non-compliance

3. Flexible contribution requirements

4. Service provider selection criteria

The correct answer is: Specific performance levels for plan services

A Service Level Agreement (SLA) is a crucial document that specifies the expected performance levels for services provided by a service provider to a plan sponsor. This agreement outlines key performance indicators (KPIs) and the standards the service provider is expected to meet, which may include response times, resolution rates, and overall service quality. By establishing these specific performance levels, both the plan sponsor and the service provider have a clear understanding of expectations, enabling accountability and a basis for assessing service delivery. While financial penalties for non-compliance, flexible contribution requirements, and service provider selection criteria are important considerations in the overall relationship between a plan sponsor and service provider, they do not specifically define the core aspects of an SLA. Financial penalties may be addressed in the context of service agreements but are not a defining feature of what an SLA primarily seeks to accomplish. Flexible contribution requirements relate to funding aspects of a plan rather than the performance of services, and service provider selection criteria may be discussed prior to signing an SLA but do not form part of the ongoing service delivery framework defined by an SLA.