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Target-Benefit Plan
(redirected from Target Benefit Plans)

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Target-Benefit Plan
A pension plan with a defined contribution but no guaranteed payout. That is, when the annuitant purchases the plan, he/she makes a contribution each month according to a formula that is most likely to result in a certain payout when he/she begins receiving payments. The formula assumes a certain interest rate and/or market movements will take place. If these do not occur according to the formula's projections, the plan's operators are under no obligation to provide the projected payout. Instead, they provide what the contributions have actually earned over the life of the pension.


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Proposals include: making greater use of electronic delivery of information (Alberta-British Columbia and Ontario); providing information annually to retirees (Ontario); and requiring target benefit plans to identify the contingent nature of promises (Alberta-British Columbia and Ontario).
Examples Examples of pension plans include profit sharing plans, defined benefit plans, ESOPs or employee stock ownership plans, thrift plans, bonus plans, money purchase plans and target benefit plans.
401Ks (recently mine has become a 201K with the stock market challenge), target benefit plans, defined contribution plans, ESOPs--to name a few--have numerous characteristics and components which are both appealing to the employer and the employee.
 
 
 
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