Defined-Benefit Plan

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Defined-Benefit Plan

A retirement plan in which the retiree receives a set amount in benefits each month once he/she begins receiving benefits. That is, the benefits the retiree receives are not dependent on the performance of the portfolio in which the contributions are invested; the company sponsoring the plan assumes the entire liability. The amount of the benefit is determined according to some formula that usually accounts for the amount of contributions and the length of time the retiree worked for the company. The disadvantage to a defined-benefit plan, from the company's perspective, is the possibility that the investment portfolio will not perform as expected, forcing the company to make payments from its earnings, or, worse, to borrow money. See also: Defined-contribution plan.
References in periodicals archive ?
Consequently, those who are interested in the sustainability of defined benefit pension plans administered through an agent multiple-employer pension plan have no choice but to turn to the individual employer's financial statements to obtain information on the net pension liability relevant to that employer.
Chrysler Group, a United States-based automaker, is planning to freeze its salaried employee defined benefit pension plans, effective December 31, 2014.
HOUSTON, April 9 /PRNewswire-FirstCall/ -- Continental Airlines today announced that it has contributed an additional $50 million in cash to its defined benefit pension plans, bringing its total year-to-date contribution to its defined benefit pension plans to $100 million.
Alaska Airlines has made a voluntary contribution of USD50m in cash to four defined benefit pension plans covering 7,300 employees in its airport, dispatch, maintenance, management and pilot work groups.
Over the years, the mill provided employees with defined benefit pension plans, something other woodland operators in the industry do not have.
Just 21 percent of workers in private industry are now covered by defined benefit pension plans, which prior generations counted on for a lifetime stream of income.
25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans; paragraphs 5 and 11 of GASB Statement No.
In 1978, 41 percent of private sector workers were covered by defined benefit pension plans.
Companies began moving from the defined benefit pension plans to the defined contributions of 401 (k) plans.
A RECENT REPORT from the Certified General Accountants Association of Canada stated: "Fifty-nine percent of all defined benefit pension plans are running deficits, requiting $160 billion to cover the shortfall.
Traditional defined benefit pension plans have taken a backseat--in perception if not in reality--to their defined contribution counterparts for the better part of the past two decades.
412(i) plans are defined benefit pension plans guaranteed exclusively with annuity contracts and life insurance.

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