Defined-Benefit Plan

(redirected from Defined-Benefit Plans)

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 ?
What is the funding status of corporate defined-benefit plans in Canada?
While that's true, it is not necessarily a bad thing where defined-benefit plans are concerned, because slowing the rate of return can actually save on taxes in the long term and stabilize market volatility in the short term.
With just 13% of credit unions offering their employees defined-benefit plans, is a shift underway that could potentially open up the window for employers to increase participation?
We may as well scrap defined-benefit plans because over time taxpayers will pay the same for public services either way.
The median annual rate of return for defined-benefit plans averaged 10.13 percent compared with 9.06 percent for 401(k) plans from 1995 through 2007, according to consulting firm Towers Watson.
Fully insured, defined-benefit plans are unique in the retirement planning arena because they have a higher tax-deduction limit than most plans.
This book examines how government policy makers can promote the financial security of occupational defined-benefit plans, particularly those financed by pension funds.
* After 2007, the allowable deduction for contributions to defined-benefit plans is the greater of the minimum required contribution under the minimum funding standards or the sum of the funding target, the target normal cost, and the cushion amount for the plan year.
The Act establishes a standard for all defined-benefit plans that clarifies current law with respect to age discrimination under the Employee Retirement Income Security Act (ERISA) and removes the last impediments to adopting cash balance plans.
To defend defined-benefit plans, NEA has built a Retirement Security Toolkit to help members understand the issues.
"Risk may increase if large defined-benefit plans begin to struggle or fail, especially if the Pension Benefit Guaranty Corp.
When will the public realize that companies can no longer afford defined-benefit plans and inevitably must switch to a defined-contributions plan?