differences between defined benefit and defined contribution retirement plans
Confidence votes 637. A defined benefit plan provides a set amount of benefit to the employee at the time of retirement, and a defined contribution plan specifies the amount of money an employer contributes to a retirement fund for each individual employee. 7 people found this useful.
The benefit amount is usually based on your average salary, years of service, etc. A definent contribution plan is like a 401(k). You, and in some cases your employer, contribute a certain amount each paycheck. At retirement, the amount you receive, and for how long, isn't certain as it is with a defined benefit plan.
Less favored as primary plans by union leaders. Flexible Benefit Retirement Plan Provision. Defined benefit plans cannot be part of a flexible benefit package. Some types of defined contribution plans (401(k), profit sharing, and stock bonus) may be included in a flexible benefit package.