Defined Benefit

A defined benefit (DB) plan is a type of pension plan that provides employees with a specific, predetermined retirement benefit based on a formula established by the employer. The formula typically considers factors such as the employee's salary history, length of service, and a predetermined benefit accrual rate. In a defined benefit plan, the employer bears the investment and longevity risks of providing the promised benefits. The employer is responsible for ensuring sufficient funds to pay out retirement benefits to eligible employees when they reach retirement age.