When most people think of a pension, they think in terms of receiving a specified benefit, typically on a monthly basis for the rest of their life. This is the traditional pension—technically known as a defined benefit plan. In this type of retirement plan, the company first determines your projected retirement benefit and then makes contributions to make sure those benefits get paid. You don't have a separate account in your name. Based on the company's pension formula, the employer is able to estimate a projected future benefit you can use in your retirement planning.
If your company offers a defined benefit plan, there are a few important things you should know:
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