Defined Benefit Plans

A traditional pension is often called a Defined Benefit plan (DB). It is called a DB Plan because it guarantees a monthly pension benefit for the life of the participant. A DB plan must maintain certain levels of funding, although the actual benefit of the plan is defined by a formula which usually includes how benefits are accrued under the plan. Defined Benefit plan typically favors older employees with longer terms of service. For the Defined Benefit plans we work with, we're usually involved as consultants on plan operations and often manage the assets. A DB plan is a useful tool, but as our workforce has changed many plan sponsors find DB plans harder to maintain and some consider switching to other plan types. As with other plan types, the type of plan requires an in depth look at what suits your organization.

Defined Benefit plans are ideal for:

Employers who are older and have more service than other employees
Employers wishing to maximize contributions
Employers with substantial resources
Employers with stable income

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Defined Benefit Plans