Traditional Defined Benefit Plans

A traditional Defined Benefit Plan is what is commonly, and historically, considered a “pension plan.” A DB plan provides a guaranteed pension at retirement that is not based on employee contributions. An established formula, typically based on an employee’s age and years of service, determines the stipend received by a retiree. This type of plan is funded entirely by the company, and the contributions are non-discretionary, actuarially determined each year and required.