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.
References in periodicals archive ?
Government values the security that workplace defined-benefit pension plans provide and wants them to continue so Nova Scotians can have peace of mind in their retirement years, said Finance and Treasury Board Minister Karen Casey.
nonfinancial companies with defined-benefit pension plans and found that 160 of them had plans that were less than 80% funded, Barron's reports.
Educators in public schools in the United States are typically enrolled in defined-benefit pension plans, which penalize across-plan mobility.
companies continue to shift from defined-benefit pension plans to 401(k)s.
Defined-benefit pension plans are consistently earning higher rates of return than 401(k) plans, according to an analysis released in February.
As Fran Hawthorne details, defined-benefit pension plans are now the exception rather than the rule in American business.
One-third of private sector employees in America partake in private defined-benefit pension plans. (8) Nevertheless, Americans are unprepared for retirement.
ADVOCATE FOR mandatory coverage of ESPs by a retirement system or plan that provides a guaranteed benefit without assuming risk, such as defined-benefit pension plans, which guarantee a set monthly income upon retirement.
About half of the legislation deals with traditional defined-benefit pension plans, but other parts discuss the more popular defined-contribution plans and IRAs, which affect more taxpayers than do the traditional pension rules.
Increasing medical costs, rising life expectancy and the shrinking role of defined-benefit pension plans have combined to create an investment period that Prudential Financial has dubbed the Retirement Red Zone[SM].
said Friday it has assumed responsibility for the pensions of nearly 4,000 employees and retirees of Aloha Airlines, which emerged from bankruptcy in February, two months after it received US District Court permission to cancel its defined-benefit pension plans to which it owed $155 million.
Hawaii's Aloha Airlines has been granted court approval to terminate its employees' defined-benefit pension plans.