Pension Plans
Traditional Pension Plans, which involve no contributions from employees, themselves, are still a option for some organizations. There are two basic types of plans:

• Defined Benefit Plan
  This plan defines the benefit amount each participant will receive at retirement age and then estimates how much must be contributed by the employer each year to accumulate that amount. The benefit amount to be received at retirement may be based on a flat percentage of compensation, a percentage that increases with years of service or at certain compensation levels, etc. Employees’ ages, years remaining to work, interest rates and so forth must be considered to determine the appropriate annual contribution. The investment risk is incurred by the employer; employees have no control over how funds are invested.
• Money Purchase Pension Plan (Defined Contribution Plan)
  In this type of plan, employers commit to a fixed contribution, based on a percentage of each eligible participant’s salary. Contributions are not tied to profitability and—unlike a Profit Sharing Plan—are not discretionary year to year. An employee’s account balance at retirement age is based on total contributions and investment earnings on those contributions. In Money Purchase Pension Plans, employees may be allowed to direct how their funds are invested.

To help determine what type of retirement plan may be most suitable for your organization, please contact us for a personal consultation.