defined contribution plan

   A type of occupational pension that has a fixed contribution rate but does not guarantee any particular pension amount on retirement. The employer pays into the pension fund a certain amount every month or every year for each employee; this is usually a fixed percentage of the employee's wages or salary but may be a percentage of the company's profits. The plan is based on these contributions rather than on the employee's final salary immediately before retirement. At retirement, the pension fund is used to purchase an annuity, the value of which depends on the level of contributions made to the fund on behalf of the employee, the investment returns received by the fund as a whole, and annuity rates at the time.

Business law dictionary. 2015.

Look at other dictionaries:

  • defined contribution plan — n: a pension plan in which the amount of the contributions made by the employer is fixed in advance and earnings are distributed proportionately Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. defined contribution plan …   Law dictionary

  • Defined contribution plan — See also: Defined benefit plan In economics, a defined contribution plan is a type of retirement plan in which the amount of the employer s annual contribution is specified.[1] Individual accounts are set up for participants and benefits are… …   Wikipedia

  • defined contribution plan — A pension or other employee benefit plan that provides a specified contribution amount for the benefit of eligible employees. The participants ultimately receive amounts that depend on both the accumulated contributions and the investment returns …   Financial and business terms

  • Defined contribution plan — A pension plan in which the sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: defined benefit plan …   Financial and business terms

  • Defined-Contribution Plan — A retirement plan in which a certain amount or percentage of money is set aside each year by a company for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties. There is no way to… …   Investment dictionary

  • Defined Contribution Plan — Altersvorsorgeplan mit fixen Beiträgen, bei dem die Versorgungsleistungen von den Beiträgen zu einem externen Fonds und der Rendite des ausgesonderten Vermögens abhängen (beitragsorientierte Zusagen) …   Lexikon der Economics

  • defined benefit plan — de·fined benefit plan n: a pension plan in which the amount of benefits paid to an employee after retirement is fixed in advance in accordance with a formula given in the plan Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. defined… …   Law dictionary

  • defined benefit plan — A pension or other employee benefit plan that provides specified amounts of benefits to eligible participants. The specified amounts of benefits are usually determined based upon age, years of service, and/or levels of compensation. American… …   Financial and business terms

  • Defined benefit plan — A pension plan in which the sponsor agrees to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related: defined contribution plan …   Financial and business terms

  • defined benefit plan — /dɪˌfaɪnd benefɪt plæn/, defined contribution plan /dɪˌfaɪnd ˌkɒntrɪ bju:ʃ(ə)n plæn/ noun US a pension plan set up by corporations for their employees …   Dictionary of banking and finance

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