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Defined Benefit Plan
What does it mean?
An employer-sponsored retirement plan for which retirement benefits are based on a formula indicating the exact benefit that one can expect upon retiring. Investment risk and portfolio management are entirely under the control of the company. There are restrictions on when and how you can withdraw these funds without penalties.
In Other Words...
This fund is different from many pension funds whose payout is somewhat dependent on the return of the invested funds. The payouts made to retiring employees participating in this defined benefit plan are determined by factors such as salary history and the duration of employment.
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Related Terms
Cash Balance Pension Plan | Defined Contribution Plan | Pension Plan | Pension Shortfall | Superannuation | Target Benefit Plan
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