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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Defined Benefit Pension Plans. According to Julie Albrecht, Sonoco's Vice President and CFO, the voluntary contributions are projected to increase the funded status of the Company's U.S.
assets for defined benefit pension plans (table 7.21, line 30) and
Alcoa Corporation (NYSE:AA) declared on Wednesday that it signed group annuity contracts to transfer an estimated USD555m in obligations and related assets, of defined benefit pension plans in Canada.
Alcoa said it will try to reduce its exposure to retiree benefits obligations by freezing the defined benefit pension plans it now offers for salaried employees in the United States and Canada.
What types of defined benefit pension plans are not subject to Title IV of ERISA and, therefore, would be exempt from providing the annual funding notice?
Defined benefit pension plans - which promise a worker a certain amount of money in retirement - have been going the way of the dinosaur when it comes to businesses, replaced with some version of a defined contribution plan, in which an employer and/or employee contribute a specific amount each year to the employee's pension plan, such as a 401k.
Business groups appear satisfied with a proposed new rule from the Treasury Department that gives companies additional leeway to fund "closed" defined benefit pension plans, or plans that aren't open to new employees.
The team is also responsible for Manulife's internal defined benefit pension plans in both the US and Canada.
Contributions to multiemployer defined benefit pension plans have been a mainstay, legacy feature of union negotiations in many industries.
The new contract gives Goodyear the ability to freeze its defined benefit pension plans and replace them with a defined contribution plan at any time during the four-year contract once full funding is achieved.
Chrysler Group, a United States-based automaker, is planning to freeze its salaried employee defined benefit pension plans, effective December 31, 2014.

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