- A defined benefit plan is an employer-based program that pays benefits based on factors such as years of service and salary history.
- Pensions are defined benefit plans.
- Unlike defined contribution plans, the employer, not the employee, is responsible for all planning and investment risks of a defined benefit plan.
- Benefits can be distributed as fixed monthly payments, such as an annuity, or as a lump sum.
- The surviving spouse is often entitled to benefits in the event of a worker’s death.