Benefits
Retirement plans may be classified as defined benefit or defined contribution according to how the benefits are determined. A defined benefit plan guarantees a certain payout at retirement, according to a fixed formula which usually depends on the member's salary and the number of years' membership in the plan. A defined contribution plan will provide a payout at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilized.
Some types of retirement plans, such as cash balance plans, combine features of both defined benefit and defined contribution plans. They are often referred to as hybrid plans. Such plan designs have become increasingly popular in the US since the 1990s. Examples include Cash Balance and Pension Equity plans.
Read more about this topic: Pension System
Famous quotes containing the word benefits:
“It is with benefits as with injuries in this respect, that we do not so much weigh the accidental good or evil they do us, as that which they were designed to do us.—That is, we consider no part of them so much as their intention.”
—Laurence Sterne (1713–1768)
“In America the young are always ready to give to those who are older than themselves the full benefits of their inexperience.”
—Oscar Wilde (1854–1900)
“While greedy good-doers, beneficent beasts of prey,
Swarm over their lives enforcing benefits ...”
—Robert Frost (1874–1963)