The recommended contribution formula does not meet all of the Chocolate Factory’s goals. It does allow the Chocolate Factory to meet its budget. It does allow the Chocolate Factory to provide new career employees an adequate pension plan. This should allow the company to attract and retain new employees.
The defined contribution plan does not, however, allow the Chocolate Factory to provide adequate pensions to its existing long service employees. A risk that the employees will not be satisfied remains. On the other hand, the introduction of the plan now will mitigate future risks. The company should look at alternate solutions to the problem of providing adequate pensions to its existing employees.
The Chocolate Factory also has an older employee who was a recent hire. I assumed that the company did not intend to provide this non-career employee with a substantial pension.