CEBS RPA 2 UPDATED COMPREHENSIVE
QUESTIONS AND ANSWERS RATED A+
✔✔Use of bonds in pension plan portfolios - ✔✔Generate cash flow similar to benefit
payments, assume interest rate risk
✔✔Basic types of common stocks - ✔✔Blue-chip, Growth, Income, Cyclical, Defensive,
Interest-sensitive
✔✔Reasons for using mutual funds in pension plans - ✔✔Greater liquidity,
Diversification, Portfolio specialization, Daily update of holdings, Ease of meeting goals,
Checking past performance
✔✔Information in questionnaire for investment managers - ✔✔Portfolio strategies,
Ownership, Decision-making procedures, Clients and references, Performance statistics
✔✔Passive investment strategy - ✔✔Broadly diversified buy-and-hold portfolio
replicating market index
✔✔Index funds and active management - ✔✔Allows focus on specialty areas, higher
risk strategy
✔✔Dedication and immunization techniques - ✔✔Construct bond portfolio to fund
specific plan liabilities
✔✔Employer and employee roles in DC plan investment - ✔✔Employer selects,
monitors, communicates; Employees assume investment risks
✔✔Benefits of successful investment program - ✔✔Low-cost fees, Ease of
administration, Flexibility, Improved recognition, Increased participation, Improved
returns, Lower costs
,✔✔Factors contributing to enhanced investment opportunities in DC plans - ✔✔Public
awareness, Employer recognition, Improved administration, Marketing efforts
✔✔Variety of investment choices in DC plan - ✔✔Does not ensure maximum benefits,
need for education
✔✔Protection and improvement of DC plan investment outcomes - ✔✔PPA provisions
for investment advice, diversification, fiduciary exemption
✔✔Areas to consider in evaluating DC plan investment provisions - ✔✔Fiduciary
responsibilities, Employer stock, Administrative issues
✔✔Conformity with Section 404(c) safe harbor provisions - ✔✔Does not relieve
employer of fiduciary responsibility
✔✔Disadvantages of using employer stock in DC plan - ✔✔Undiversified, SEC
requirements, Employee relations, Tied to company's well-being
✔✔Administrative issues in structuring DC plan investments - ✔✔Valuation frequency,
Change frequency, Default provisions, Negative elections, Employee communications
✔✔Decisions in design phase of plan investment provisions - ✔✔Asset classes,
Investment objectives, Active or passive style, Selection and monitoring of managers
✔✔Benefits plan design - ✔✔Creating the structure and features of employee benefits
plans
✔✔Benefits plan delivery - ✔✔Providing employee benefits to plan participants
✔✔Benefits policy formulation - ✔✔Developing the rules and guidelines for employee
benefits
✔✔Communications - ✔✔Conveying information about employee benefits to plan
participants
✔✔Applying technology - ✔✔Using technology to manage and administer employee
benefits
✔✔Cost management and resource controls - ✔✔Managing the expenses and
resources associated with employee benefits
✔✔Management reporting - ✔✔Generating reports on the performance and
effectiveness of employee benefits
, ✔✔Legal and regulatory compliance - ✔✔Ensuring adherence to laws and regulations
related to employee benefits
✔✔Monitoring the external environment - ✔✔Keeping track of external factors that may
impact employee benefits
✔✔Plan complexity - ✔✔The level of intricacy in employee benefits plans
✔✔Dual standards - ✔✔Meeting both company and legal standards for employee
benefits communications
✔✔Tax law provisions - ✔✔Rules and regulations related to taxes within the Internal
Revenue Code (IRC)
✔✔Labor law provisions - ✔✔Rules and regulations related to labor within the
Employee Retirement Income Security Act (ERISA)
✔✔Title I of ERISA - ✔✔The section of ERISA that covers reporting and disclosure
requirements
✔✔Summary plan description (SPD) - ✔✔A document that describes the employee
benefits plan and is given to employees
✔✔Summary of material modification (SMM) - ✔✔A summary of plan amendments or
changes that is added to the SPD
✔✔Summary annual report (SAR) - ✔✔A summary of the plan's annual financial report
✔✔Benefits statements - ✔✔Personalized statements provided to participants about
their retirement plans
✔✔PPA - ✔✔Pension Protection Act of 2006, which made changes to retirement plan
requirements
✔✔Filing requirements - ✔✔Rules and regulations related to filing annual financial
reports
✔✔Benefit statement - ✔✔A statement that provides information about a participant's
retirement benefits
✔✔Plan documents - ✔✔The official documents that establish and operate an
employee benefits plan
QUESTIONS AND ANSWERS RATED A+
✔✔Use of bonds in pension plan portfolios - ✔✔Generate cash flow similar to benefit
payments, assume interest rate risk
✔✔Basic types of common stocks - ✔✔Blue-chip, Growth, Income, Cyclical, Defensive,
Interest-sensitive
✔✔Reasons for using mutual funds in pension plans - ✔✔Greater liquidity,
Diversification, Portfolio specialization, Daily update of holdings, Ease of meeting goals,
Checking past performance
✔✔Information in questionnaire for investment managers - ✔✔Portfolio strategies,
Ownership, Decision-making procedures, Clients and references, Performance statistics
✔✔Passive investment strategy - ✔✔Broadly diversified buy-and-hold portfolio
replicating market index
✔✔Index funds and active management - ✔✔Allows focus on specialty areas, higher
risk strategy
✔✔Dedication and immunization techniques - ✔✔Construct bond portfolio to fund
specific plan liabilities
✔✔Employer and employee roles in DC plan investment - ✔✔Employer selects,
monitors, communicates; Employees assume investment risks
✔✔Benefits of successful investment program - ✔✔Low-cost fees, Ease of
administration, Flexibility, Improved recognition, Increased participation, Improved
returns, Lower costs
,✔✔Factors contributing to enhanced investment opportunities in DC plans - ✔✔Public
awareness, Employer recognition, Improved administration, Marketing efforts
✔✔Variety of investment choices in DC plan - ✔✔Does not ensure maximum benefits,
need for education
✔✔Protection and improvement of DC plan investment outcomes - ✔✔PPA provisions
for investment advice, diversification, fiduciary exemption
✔✔Areas to consider in evaluating DC plan investment provisions - ✔✔Fiduciary
responsibilities, Employer stock, Administrative issues
✔✔Conformity with Section 404(c) safe harbor provisions - ✔✔Does not relieve
employer of fiduciary responsibility
✔✔Disadvantages of using employer stock in DC plan - ✔✔Undiversified, SEC
requirements, Employee relations, Tied to company's well-being
✔✔Administrative issues in structuring DC plan investments - ✔✔Valuation frequency,
Change frequency, Default provisions, Negative elections, Employee communications
✔✔Decisions in design phase of plan investment provisions - ✔✔Asset classes,
Investment objectives, Active or passive style, Selection and monitoring of managers
✔✔Benefits plan design - ✔✔Creating the structure and features of employee benefits
plans
✔✔Benefits plan delivery - ✔✔Providing employee benefits to plan participants
✔✔Benefits policy formulation - ✔✔Developing the rules and guidelines for employee
benefits
✔✔Communications - ✔✔Conveying information about employee benefits to plan
participants
✔✔Applying technology - ✔✔Using technology to manage and administer employee
benefits
✔✔Cost management and resource controls - ✔✔Managing the expenses and
resources associated with employee benefits
✔✔Management reporting - ✔✔Generating reports on the performance and
effectiveness of employee benefits
, ✔✔Legal and regulatory compliance - ✔✔Ensuring adherence to laws and regulations
related to employee benefits
✔✔Monitoring the external environment - ✔✔Keeping track of external factors that may
impact employee benefits
✔✔Plan complexity - ✔✔The level of intricacy in employee benefits plans
✔✔Dual standards - ✔✔Meeting both company and legal standards for employee
benefits communications
✔✔Tax law provisions - ✔✔Rules and regulations related to taxes within the Internal
Revenue Code (IRC)
✔✔Labor law provisions - ✔✔Rules and regulations related to labor within the
Employee Retirement Income Security Act (ERISA)
✔✔Title I of ERISA - ✔✔The section of ERISA that covers reporting and disclosure
requirements
✔✔Summary plan description (SPD) - ✔✔A document that describes the employee
benefits plan and is given to employees
✔✔Summary of material modification (SMM) - ✔✔A summary of plan amendments or
changes that is added to the SPD
✔✔Summary annual report (SAR) - ✔✔A summary of the plan's annual financial report
✔✔Benefits statements - ✔✔Personalized statements provided to participants about
their retirement plans
✔✔PPA - ✔✔Pension Protection Act of 2006, which made changes to retirement plan
requirements
✔✔Filing requirements - ✔✔Rules and regulations related to filing annual financial
reports
✔✔Benefit statement - ✔✔A statement that provides information about a participant's
retirement benefits
✔✔Plan documents - ✔✔The official documents that establish and operate an
employee benefits plan
