This problem is from the GMAC paper tests. Try it on your own, then scroll down for my explanation!
A requirement of traditional pension plans is that an employee work for a company a number of years before gaining full rights to benefits from the company’s plan on retirement. Companies used this requirement to help them retain employees, but recent regulations have substantially reduced the number of years of work a company can require. Nevertheless, companies have not experienced any significant loss of employees.
Which of the following, if true, helps to explain why companies are not experiencing problems in retaining employees?
(A) As the number of years an employee has worked for a company increases, the rate at which the company contributes to the employee’s pension benefits increases.
(B) Potential employees prefer to work for companies that offer them pension plans rather than for those that do not.
(C) Most companies that do not offer traditional pension plans offer plans in which their employees enjoy rights to retirement benefits as soon as they enter employment.
(D) An employee is more willing to leave an employer after gaining full rights to pension benefits than before gaining such rights.
(E) Employers have always been reluctant to lose highly trained employees.
Let’s take apart the argument here:
Conclusion: Companies have not experienced significant loss
Evidence: None given
Assumptions: There is another reason the company hasn’t lost employees, despite the new regulations that reduce the # of years required for a pension
Since no evidence is given, we can predict that there is one of two reasons for the lack of employee loss:
Either there is another reason the employees are staying OR the requirement of years is not in fact as strong an incentive on employee continuation as previously thought.
(A) is correct because it shows why the employees wouldn’t care if the pension plan changed. It’s much better in the long term to have a rate that is constantly shifting higher from year-to-year under the new regulations, than to get a set amount after a set number of years. This choice means more money for the employees.