Defined Benefit (DB) plans

A Defined Benefit (DB) plan is a type of retirement plan where an employer promises to provide a specific pension amount to employees based on factors like salary and years of service. The employer regularly contributes to a pool of funds, manages the investments, and guarantees the payout upon retirement. Employees typically do not have to make investment decisions; the benefit is predetermined and reliable. These plans shift investment risk from the employee to the employer, offering security but requiring the company to manage sufficient funds to meet future obligations.