Defined Benefit Plan
/ˌdɪˌfaɪnd ˈbɛnɪfɪt plæn/
Definitions
- (n.) A retirement pension plan in which an employer promises a specified monthly benefit on retirement, predetermined by a formula based on the employee's earnings history, tenure of service, and age.
The company's defined benefit plan guarantees employees a retirement income based on their years of service and salary.
Forms
- defined benefit plan
- defined benefit plans
Related terms
See also
Commentary
Defined benefit plans shift investment risk to the employer, unlike defined contribution plans where employees bear the risk; drafting should clearly specify benefit formulas and funding obligations.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.