Investor Glossary-pension planInvestor Glossary-pension planInvestor Glossary-pension planInvestor Glossary-pension planInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Pension Plan

The HTML to link to this page
 

A pension plan is an agreement between an employer and its employees to pay retirement benefits. A defined benefit pension plan states the benefits that management must pay, according to a predetermined formula. A defined contribution pension plan states the required contributions management must make, not the benefits it must pay; outlays to beneficiaries depend on the investment return on funds invested in the pension plan. Employees may also be required or allowed to contribute to a firm's pension plan. A pension plan usually contains tax benefits for both the employer and beneficiary: the investment income of a pension fund is ordinarily tax-exempt, and benefits paid to retirees are taxed when paid, not earned. Nevertheless, the defined benefit pension plan has been losing ground in recent years: in 1985, defined benefit pension plans numbered 112,000 in the U.S., compared with just 31,000 in 2003. Funding for the defined benefit pension plan of a company may be undermined if it has financial difficulties, as has happened in recent years to many firms with a defined benefit pension plan.



Rate this pension plan definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: limit order, EBITDA, reverse mortgage, per diem, balance sheet, APR, option premium, cancelled check, required rate of return, debt service coverage, covered put, wholly-owned subsidiary, Key Rate Duration, dividends payable, liquidity ratio, deferred revenue, labor relations, quality assurance, diluted share, margin rate, 144a, inflation, ex-dividend, in escrow, risk management, retained earnings, deferred tax, FICO score, 401a, stock split, 1035 exchange, phantom income, command economy, FTSE, minority interest, irrevocable trust, VIX, stock market close, average price per share, Zero Cost Collar, open position, 1031 exchange, current ratio, ex-dividend date, implied volatility, annual return, real GDP, LIBOR, class C shares


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use