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:
“When your parents are in political life, you aren’t normal. Everybody talks about the benefits, but I don’t know what the benefits are.... But I’d rather have that kind of mother than an overweight housewife.”
—Katherine Berman Mariano (b. 1957)
“I do seriously believe that if we can measure among the States the benefits resulting from the preservation of the Union, the rebellious States have the larger share. It destroyed an institution that was their destruction. It opened the way for a commercial life that, if they will only embrace it and face the light, means to them a development that shall rival the best attainments of the greatest of our States.”
—Benjamin Harrison (1833–1901)
“Through all opposition the personal benefits of the reform [dress] [bracketed word in original] have compensated; but had it been mainly sacrifice, the thought of working for the amelioration of women and the elevation of humanity would still have been the beacon-star guiding me on amid all discouragements.”
—Susan Pecker Fowler (1823–1911)