defined_contribution_plan - Benefits paid to retirees are a...

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Defined Contribution Plan (A common form of this plan is a 401(k) plan) provide services pays wages m a k e s a p r o m i s e t o contribute $xxx to pension fund fixed uncertain contributions pension benefits paid d u r i n g r e t i r e m e n t Notes: Contributions to pension fund are often stated as a percentage of current wages. The employer’s annual cost (pension expense) is the amount that it is obligated to contribute. The employer makes no promise regarding the ultimate benefits paid to employees.
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Unformatted text preview: Benefits paid to retirees are a function of cumulative contributions and the income accumulated in the trust fund. The employee gets the benefit & is at the risk of loss from the assets contributed to the pension plan. Employer Current employees Retirees Pension trust fund or Purchase of investment contract - controls/invests assets - makes payments to retirees...
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