A past service pension adjustment can ONLY occur under which type of plan?

A past service pension adjustment is specifically associated with defined-benefit plans. This type of adjustment arises when benefits accrued for service prior to a certain point are recognized and included in the pension calculations. In defined-benefit plans, the retirement benefits are predetermined and based on factors such as years of service and earnings, meaning that adjustments for past service can significantly impact the calculation of the pension amount.

In contrast, defined-contribution plans do not involve promises for a specific benefit at retirement; instead, contributions are made to individual accounts, and the retirement benefit is based on the amount accumulated in these accounts. As such, there is no concept of past service adjustments, since the benefits rely solely on contributions and investment returns.

Guaranteed investment plans and flexible savings plans are not pension plans in the traditional sense and do not involve defined benefits or the need for past service adjustments, making them irrelevant in this context. Therefore, the association between past service adjustments and defined-benefit plans highlights how these plans are structured to ensure that all periods of service are valued and compensated appropriately in a worker's retirement plan.