Defined Contribution Plan

A retirement plan in which the employee and/or employer contribute a set dollar amount each month. The benefits of a defined contribution plan are not set, and depend upon how well the contributions are invested before the pensioner starts to make withdrawals. The disadvantage of a defined contribution plan is the possibility that the investments will not perform as well as expected, giving the pensioner a less secure retirement. The advantage is that the pensioner, while still making contributions, has the ability to determine how the contributions are invested, at least to a certain extent. See also: 401(k).

defined-contribution pension plan

A pension plan in which an employer's periodic payments into the plan, rather than eventual retirement benefits to employees, are specified. For example, a defined-contribution pension plan may require an employer to contribute 5% of its employees' gross pay into a fund with contributions earmarked for each employee upon retirement.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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References in periodicals archive

This is what a defined-contribution pension plan resolves.

Pension funds don't seem to have the answers

In 2011, Canada Post tried to force CUPW members into accepting a defined-contribution pension plan for new hires.

Retirement a rough reality cheque without pension security

In addition, the authors indicate that workers were more likely to reenter the workforce after retirement if they were younger, were in better health, or had a defined-contribution pension plan.

The June Review

The Roth 401(k) is a feature that can be added to a new or existing company-sponsored defined-contribution pension plan, including traditional 401(k)s, safe-harbor 401(k)s, and 403(b) tax-sheltered annuities.

Top things to know about Roth 401(k)s

The losses resulted from a change in Japanese accounting standards regarding fixed assets and Nissan's introduction of a defined-contribution pension plan, it said.

Nissan's April-June group net profit down on one-time losses

It also upheld the creation of a defined-contribution pension plan, similar to the 401(k) plans that have gained favor with private employers, for PERS-covered employees hired after August 2003.

PERS reformers won

The award adopts the new enhanced defined-contribution pension plan for new employees and provides current employees the choice--the same as for some other work groups and management--to move into the same enhanced defined-contribution plan or remain in their existing defined-benefit plan.

Alaska Airlines and AMFA reach settlement. (Transportation)

The airline and the pilots' union previously agreed to a new, defined-contribution pension plan that will replace the old defined-benefits plan.

Federal pension regulators to consider US Airways' proposed pension plan

This structure mandates that every (formal sector) worker pay 10 percent of earnings into a privately administered defined-contribution pension plan. System taxes are collected by a pension sales force of more than 19,000 agents; individual workers may designate a fund manager from among approximately 20 state-licensed and regulated fund managers who compete for the privilege of managing workers' investments.

Social Security reform in Latin America

Creating personal savings accounts or private accounts within the Social Security system would change it from a pay-as-you-go social insurance program to a hybrid with a defined-contribution pension plan component.

Promises to keep

401(k) defined-contribution pension plan during the current parliamentary session.

Coalition panel set to OK stock-boosting steps

The defined-contribution pension plan will be an alternative to the current defined-benefit pension plans, many of which are running at a loss.

Gov't to launch 401(k) pension plan in Japan next Jan