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 ?
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.
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.
In addition to working with other groups to provide state organizations with information to help defend defined-benefit plans, NEA has built a Retirement Security Toolkit to help members understand the issues at stake.
Risk may increase if large defined-benefit plans begin to struggle or fail, especially if the Pension Benefit Guaranty Corp.
412 (1)(7)(C)(ii) (and parallel Employee Retirement Income Security Act of 1974 Section 302(d)(7)(C)(ii)) to determine current liability for participants and beneficiaries (other than disabled participants) of defined-benefit plans for plan years beginning in 2007.
Lincoln said the bear market in stocks had created a renewed interest in these defined-benefit plans.
According to the Pension Benefit Guaranty Corporation's (PBGC) annual report for 2000, the number of PBGC insured defined-benefit plans has declined from about 114,000 in 1985 to about 38,000 in 2000.
style 401(k) defined-contribution plans and the conventional defined-benefit plans, officials of the ruling Liberal Democratic Party (LDP) said.
Companies with defined-benefit plans face mandated new rules starting January 1.