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A defined benefit pension is a type of retirement plan that provides a guaranteed income to employees in retirement. The income is based on a formula that takes into account the employee’s salary and years of service with the employer.
In a defined benefit pension plan, the employer is responsible for managing the plan’s investments and ensuring that there is enough money in the plan to pay the promised benefits to employees. This can be a significant liability for employers, particularly in cases where the plan is underfunded or investment returns do not meet expectations.
