Pension Definitions
Pension Accounting Terms:
- Defined contribution plans:
- A plan that provides benefits based solely on what has been contributed and the earnings thereon.
- Amounts to be funded are determined by the plan.
- No promise for specific future benefits.
- Size of pension trust (independent third party holds) depends on amounts contributed to trust, earnings on the trust, withdrawals from the trust and treatment of terminations.
- Risk borne by employee. Accounting relatively straightforward.