Defined benefit and a defined contribution pension plan
Differentiate in brief a defined benefit and a defined contribution pension plan.
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In the defined benefit plan, retirement benefits are recognized by a formula which generally considers the worker's salary, age, and years of service. The employee and/or the firm contribute the amounts essential to reach the goal. In a defined contribution plan, the contributions to be done by the employee and/or employer are spelled out, however retirement advantages based on the total accumulation in the individual's account at the date of retirement.
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