Differences along with advantages and disadvantages of both
- A defined contribution plan provides an individual account for each participant. The benefits are based on the amount contributed and are also affected by income, expenses, gains and loses.
- A defined benefit plan promises the participant a specific monthly benefit at retirement and may state this as an exact amount. Monthly benefits are calculated through a formula that considers a participants salary and service. Unlike defined contribution plans, the participant is not required to make investment decisions. A defined benefit plan is sometimes referred to as a fully funded pension plan.
Advantages of Defined Benefit Plans [Lees meer…] overDefined Benefit and Contribution Pension Plans