Defined Benefit Pension Plans

Defined Benefit Pension Plan Basics

A defined benefit pension plan is one of the most complex types of retirement plans and allows for little or no flexibility in employer contributions. Its main features are:

Defined Benefit Pension Plan Reasons for Establishment: To reward older employees more favorably than younger employees and to produce a benefit related to retirement needs.

Defined Benefit Pension Plan Contribution: The contribution is the amount necessary to meet funding requirements and is actuarially determined.

Defined Benefit Pension Plan Allocation of Benefit Among Participants: This is often weighted more favorably to older employees.

Defined Benefit Pension Plan Forfeitures: This reduces employer cost.

Defined Benefit Pension Plan Investments: Employers bear the financial risk of favorable or unfavorable investments.

Defined Benefit Pension Plan Distributions: Generally made at normal or early retirement age, although smaller defined benefit plans frequently allow for payment on termination of employment.


If you are considering a defined benefit pension plan but have questions or need assistance, please complete our short form.



Remarks Remarks Remarks Remarks