Which retirement plan provides a guaranteed payout based on a formula, typically defined benefit?

Which retirement plan provides a guaranteed payout based on a formula, typically defined benefit?

• A. Deferred compensation plan
• B. Defined benefit plan
• C. Culture
• D. Danger premium

Answer: (B)

Defined benefit plans guarantee a retirement payout calculated by a formula—typically based on years of service and final-average salary—so the benefit is predictable and fixed. The employer funds the plan and bears investment and longevity risk to ensure the promised amount is paid out. Other options either refer to compensation paid later (not a guaranteed pension) or aren’t retirement plans at all, so they don’t fit.

Defined benefit plans guarantee a retirement payout calculated by a formula—typically based on years of service and final-average salary—so the benefit is predictable and fixed. The employer funds the plan and bears investment and longevity risk to ensure the promised amount is paid out. Other options either refer to compensation paid later (not a guaranteed pension) or aren’t retirement plans at all, so they don’t fit.