In a defined contribution plan, the employer or employee contributions are specified, but the benefit amount is not guaranteed and is usually tied to investment returns. The majority of full-time employees are eligible to participate in retirement programs with an average rate of 91 percent per firm. The part-time employee eligibility rate is also very high at an average rate of 82 percent per firm. The most common retirement benefit waiting period for all employees is one year. The average waiting period for full-time employees is just under 10 months.
Some firms base their criteria for eligibility on other factors besides time with the company.
For example, some employees have to make a certain salary or be at least 21 years old. Not all eligible employees participate in the retirement programs. However, half of the firms report full-time employee participation rates of 90 percent or higher. Defined contribution plans are more common than defined benefit plans. Firms may offer both types of plans to employees.