Unallocated Benefit

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Unallocated Benefit

A way to structure a pension in which money deposited into an account is not used immediately to buy an instrument to fund retirement. Interest and principal are not guaranteed in an unallocated benefit plan. Upon retirement, the pensioner is either given the funds that have accumulated or those funds are used to purchase an immediate annuity. An unallocated benefit structure is also called an unallocated funding instrument.