Defined-Contribution Corporate Pension Plan

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DEFINED-CONTRIBUTION CORPORATE PENSION PLAN

These plans do not guarantee a certain benefit. Fixed contributions are paid into an individual account by employers and employees. The contributions are then invested and the returns on the investment are credited into the individual’s account. The pay-out from this rests solely on the success of the investments made.

On retirement, the member’s account is used to provide retirement benefits, usually through an annuity, which then provides a regular income. These plans have become widespread all over the world and are now the dominant form of plan in the private sector.