Definition of defined benefit
A defined benefit pension scheme is one in which the company defines the benefits that will accrue to members on retirement (often a number of times or a percentage of final salary). If the invested fund performs badly, the company must make additional contributions, whereas if the fund does well and there is more than enough money to meet the benefits promised, the surplus belongs to the company. Many defined benefit (final salary) schemes are now closed to new members, and companies are offering defined contribution schemes instead.
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