What is a defined benefit plan?

Defined benefit plans offer guaranteed salary-like payments and were historically offered in order to entice workers to stay with one company for years or even decades. Thanks to the rise of lower-cost defined contribution plans, defined benefit plans are much less prevalent today.

What are defined-benefit plans & defined-contribution plans?

Defined-benefit plans and defined-contribution plans are two retirement savings options. Defined-benefit plans, otherwise known as pension plans, place the burden on the employer to invest for their employees' retirement years and deliver a defined monthly amount once they retire. They are complicated and expensive plans to administer.

Are defined benefit plans becoming less common?

In an age of defined contribution plans like 401 (k)s, defined benefit plans are becoming less and less common, despite the retirement certainty and security pension plans can offer. How Does a Defined Benefit Plan Work?