Defined Benefit vs. Defined Contribution Pension Plan

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This video shows the difference between a defined-benefit pension plan and a defined-contribution plan. The core difference between these two types of plans boils down to what the employer is promising: with a defined-benefit pension plan, the employer is promising the employee a series of annuity payments after the employee retires. With the defined-contribution pension plan (e.g., a 401(k) plan), the employer is promising to make contributions to the employee’s retirement account.

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9 Comments

  1. Awesome… very few people can speak so clearly.

  2. Thanks for your video, It helps me a lot.

  3. Makes it understandable, as always!

  4. Great explanation of both schemes!! Thanks

  5. Buuuuuuuuuuuuuuut !!! Are you paid every month with defined contribution? I understand you put your own money in and everything, but no one ever specifies sharply that you do or don't get paid monthly with DC

  6. erm why is it cut off at the end?

  7. Great description! Thank you!

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