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Essay / Research Paper Abstract
This 3-page paper compares and contrasts defined benefit retirement plans and defined contribution retirement plans. The paper also discusses the advantages and disadvantages of each. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTdebeco.rtf
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Unformatted sample text from the term paper:
to compare and contrast these two different types of plans. Overall, the type of plan a company plans to implement mainly depends
on the workforce that is employed (Burzawa, 1995). If the workforce is a highly skilled one that the company wishes to retain for long periods of time, incentive is necessary
-- meaning a defined benefit plan (Burzawa, 1995). A defined benefit plan provides a guaranteed benefit for the employee -- no matter how well the company is doing or
not (Abraham and Schneider, 2003). Defined contribution on the other hand, rests more on employer contribution, investment choices made by employees and earnings of the company during employment (Abraham and
Schneider, 2003). Defined contribution plans are useful and successful for rewarding younger employees in the workforce -- as well as rewarding employees who have had direct participation in the financial
success of the company (Burzawa, 1995). Basically, a defined contribution plan provides more employee empowerment -- in other words, employees must make
their own decisions about where contributions are going to be invested than would be the case in a defined benefit plan (Burzawa, 1995). In fact, a defined contribution plan
tells employees that they are responsible for their retirement income -- and that other people will not necessarily take care of them upon retirement (Burzawa, 1995).
But there are more differences between these two plans and how employees handle them. For example, the defined benefit plan offers a formula for the
retiree that is based on his/her highest average wage current before retirement; while the contribution plan, as mentioned before, is based more on career earnings and investments (Abraham and Schneider,
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