Question

What is the main difference between a defined-benefit plan and a defined-

Answer 1

The amount of retirement income that employees would receive upon retirement is specified under a defined benefit plan (APERS). A defined contribution plan merely stipulates how much each party—the employer and the employee—puts into the retirement account of the employee.

What is the difference between defined benefit and defined contribution plan?

• For each participant in a defined-benefit pension plan, employers finance and guarantee a certain amount as retirement benefits.
• As the participant defers a percentage of their gross pay, defined-contribution plans are largely supported by the employee. Employers may decide to match the contributions up to a specific level.
• The responsibility of saving and investing for retirement has been put on employees as a result of the switch to defined-contribution plans.
• The 401(k) is the preferred defined-contribution plan (k).
• Companies have a consistent preference for defined-contribution plans over defined-benefit plans.

To learn more about defined benefit and defined contribution plan, refer to the following link:

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