Certified Plan Sponsor Professional (CPSP) Practice Exam

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What is a potential benefit of effective retirement plans for companies?

  1. Higher tax liabilities

  2. Reduced employee loyalty

  3. Improved employee recruitment and retention

  4. Increased turnover rates

The correct answer is: Improved employee recruitment and retention

Effective retirement plans serve as a critical component in attracting and retaining talent within a company. By offering robust retirement benefits, organizations can position themselves as desirable employers, which aids in improving employee recruitment. Candidates often evaluate the quality of retirement plans when considering job offers, making it a significant factor in their decision-making process. Moreover, once employees are on board, effective retirement plans can promote loyalty and commitment, as employees feel valued and secure regarding their financial futures. This often leads to lower turnover rates, as individuals are more likely to stay with a company that invests in their long-term well-being. The resulting workforce stability benefits organizations by reducing hiring costs and maintaining a knowledgeable and experienced team, ultimately contributing to overall business success. In contrast, options related to higher tax liabilities, reduced employee loyalty, or increased turnover rates do not highlight the benefits of effective retirement plans, as these would typically result in negative outcomes for both employees and employers.