Defined Benefit Plan

What is a Defined Benefit Plan?

 

A ‘Defined Benefit Plan’ is a pension plan in which a formula is used to determine the benefits received by the employee after retirement per month as a pension. In legacy pension schemes, the amount is decided by the employee’s finances.

 

In the case of a defined benefit plan, the formula involves a history of earnings, the final salary at the time of retirement, the employee’s age at retirement, and the duration of the service.

 

A major disadvantage of this plan is that it has an age bias in the sense that setting the plan for older employees would be costlier for the company as the aforementioned factors tend to be higher for older employees.

More HR Terms

Employment Branding

What is Employment Branding?   ‘Employment Branding’ refers to the active efforts by an employer to appeal to prospective candidates and existing employees by creating

Unemployed

What is Unemployed ? ‘Unemployed’ refers to the state of living without any kind of job or remuneration where the individual is an adult and

Contact Us

Contact Us

We use cookies on our website to provide you with the best experience.
Take a look at our ‘privacy policy’