The following will help in the selection process by defining a pension type and the programs that it offers under its belt. A defined contribution pension program is a program that each participating employee has an individual account into which contributions can be entered by the company, the employee, or both, depending on the plan. This plan describes how the money is contributed, but not how much the contributor will get at retirement. It may be some, none, or all, depending on certain circumstances. These plan are very popular with medium to large companies, and small business are starting use the plan more everyday.
Most plans are in the form of mutual funds, stock options, bonds, and other long-term investments.
There are both advantages and disadvantages to these types of retirement plans. Virtually every large company offers this program. Employee Stock Ownership Plan Employee stock ownership plans gives employees stock with the company while allowing the company to borrow money at a reduced rate. These plans are usually tied in with the 401 plans. Many companies match their contributions with company stock instead of money.