An Introduction to Pension Plans

August Baker, Dennis E. Logue and Jack S. Rader

in Managing Pension and Retirement Plans

Published in print November 2004 | ISBN: 9780195165906
Published online July 2005 | e-ISBN: 9780199835508 | DOI:
 An Introduction to Pension Plans

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This chapter presents an overview of the two major types of pension plans: defined benefit (DB) plans and defined contribution (DC) plans. Under DB plans, the employee receives an annuity at retirement and in which the payment level depends on a formula specified by the plan. DC plans are individual account plans in which a person’s retirement benefit depends on contributions and on investment returns. The discussion of DB plans will focus on how benefits accrue over an employee’s career. The discussion of DC plans will differentiate among the several varieties of this plan type.

Keywords: pension plans; defined benefit plans; defined contribution plans; retirement plan

Chapter.  2860 words. 

Subjects: Financial Markets

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