Defined Benefit Plans

Defined Benefit Plans

Definition

Frequently called pension plans, defined benefit plans require employers to pay a previously stated retirement income to employees upon retirement. Employee benefits are based on a formula using factors such as salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company.

Explanation

In a defined benefit plan, the payouts are somewhat dependent on the return of invested funds. Therefore, employers will need to dip into the companies earnings in the event that the returns from the investments devoted to funding the employee’s retirement result in a funding shortfall. The payouts made to retiring employees participating in defined-benefit plans are determined by more personalized factors, like length of employment.

 

 

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Take the next step. Call our retirement specialists today at (214) 891-8131 to discuss the workplace savings plan that may be right for you and your business. Or, contact us via the form below and one of our retirement plan specialists will respond to your inquiry.

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