A target benefit plan is a type of pension plan that contains features of a defined contribution plan but is made to appear like a defined benefit plan.
It is similar to defined benefit plan in that the annual contribution is determined by a formula to calculate the amount needed each year to accumulate (at an assumed interest rate) a fund sufficient to pay a projected retirement benefit, the target benefit, to each participant upon reaching retirement. It is similar to a defined contribution plan in that the plan does not guarantee any benefit will be paid. The plan's only obligation is to pay whatever benefit can be provided by the amount in the contributor’s account. The actual earnings on the individual accounts may differ from the estimated earnings used in the assumptions and the investment performance of that account through the years.
Read more about Target Benefit Plan: Targets
Famous quotes containing the words target, benefit and/or plan:
“Well gentlemen, this is it. This is what we’ve been waiting for. Tonight your target is Tokyo. And you’re gonna play ‘em the Star Spangled Banner with two-ton bombs. All you’ve got to do is to remember what you’ve learned and follow your squadron leaders. They’ll get you in, and they’ll get you out. Any questions? All right that’s all. Good luck to you. Give ‘em hell.”
—Dudley Nichols (1895–1960)
“When a Benefit is wrongly conferred, the author of the Benefit may often be said to injure.”
—Plato (c. 427–347 B.C.)
“I have never yet seen any plan which has not been mended by the observations of those who were much inferior in understanding to the person who took the lead in the business.”
—Edmund Burke (1729–1797)