Caribbean Hotel Services (CHS) is a small company specializing in services to the hotel industry. The company was just purchased, and the new owner was amazed to learn that there was no retirement plan for CHS workers. The new owner would like to provide adequate retirement benefits for workers and reward long-time service. The workforce consists of fourteen (14) skilled hotel housekeepers, each of whom is over age 50 and has been with the company for
over twenty-five years; two (2) customer service representatives ages 40 and 55; three bellhops ages 35, 27, and 38; and a night auditor aged 54.

Based on this situation, should this company adopt a Defined Benefit or a Defined Contribution plan?

• Distinguish between defined benefits and defined contribution pension schemes (15)
• Definitive position as to which plan should be adopted and why (5)
• Disclosure requirements in the financial statements (10)
• Analysis with reference to scenario (5)