Investment liquidating trust
This entitlement is termed "vesting." In this approach, the benefit payment is defined.
Allocation and Delegation of Fiduciary Responsibility b. Employees/participants are entitled to the percentage of the benefits established under the plan.
This tends to make cash balance plans less costly to fund and operate than traditional defined benefit pension plans.
Employer accruals under a traditional defined benefit pension plan begin relatively low, but increase sharply as an employee approaches retirement.
The participant is entitled to whatever amount the formula results in, and has a claim against all of the plan's assets for payment of the vested benefit. Another form of defined benefit plan is the "cash balance" plan. Defined benefit plans involve projecting a host of variables to estimate the amount of benefits payable upon retirement and the amount of assets that must be contributed today to fund those benefits in the future. Due to the extra costs involved, defined benefit plans have become less popular, with many defined benefit plans terminated and replaced by defined contribution plans. ESOP Plans - Employer Securities Investments - Valuation (6). Pension plan benefits are generally paid out in the form of a life annuity beginning at the participant's normal retirement date. Special Examination Applications of Fiduciary Responsibility Provisions (1). ESOP Plans - Employer Securities Investments - Prudence (5). The most common type of defined benefit plan is the traditional pension plan.