Money-Purchase Pension Plan

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Money-Purchase Pension Plan

A defined contribution pension in which an employer must contribute an amount equal to a certain percentage of the employee's compensation, usually 25%. While the amount of employer contribution is fixed, the amount of benefit is not. There are also penalties associated with receiving payments from the pension before retirement. These contributions are tax-deductible for the employer and guarantee the employee a certain amount of principal in the pension plan.
References in periodicals archive ?
But there is no automatic inflation protection at all for millions more who are in money-purchase pensions, either through their employer or on their own.
Companies are now being encouraged to provide stakeholder, money-purchase pensions that will decide an individual employee's final pension, based on the state of the stock market at the time of retirement.