What is Defined Contribution ?
A ‘Defined Contribution’ is a pension arrangement in which the contribution provided by the company is well defined and fixed annually. Normally, this contribution tends to be not set as the contributions change depending on various factors generally.
The employees benefit from this scheme as the company is bound to contribute the pre-defined amount even if the employee’s salary has been lower than regular due to any reason.
Similarly, it also benefits the company as the risks involved are lesser when compared to other pension plans. Hence, there has been a rise in the popularity of this plan in recent times.