What is the difference between the Defined Benefit (DB) and Defined Contribution (DC) plans?
• A DB (defined benefit) plan is one where the pension you ultimately receive when you retire is based on a specified formula. This means the level of your retirement benefit is guaranteed. Under the CBS DB Pension plan, your monthly pension equals 1.6% of your best average earnings (the average of your highest five consecutive years’ earnings) multiplied by your years of pensionable service (years you are a member of and contributing to the pension plan). As of March 1, 2003, as a member of the Defined Benefit (DB) plan, you contribute 5.0% of your pensionable earnings to the plan each year. CBS contributes 7.0% of your earnings to the plan as well. The Trustees of the CBS Defined Benefit Pension Plan are entirely responsible for investing the pension money and will provide you with the promised amount, regardless of how well the investments perform. • A DC (defined contribution) plan is one where the amount of your contribution to the plan is fixed. You choose how to invest your cont
Related Questions
- Why don you differentiate between income from defined benefit (DB) pensions and income from defined contribution (DC) plans like IRAs and 401(k) accounts?
- If I join the Defined Contribution (DC) plan, can I later decide to switch to the Defined Benefit (DB) plan?
- What is the difference between the Defined Benefit (DB) and Defined Contribution (DC) plans?
