Allocated benefits refer to the payments in a defined-benefit pension plan, where benefits are distributed to participants as premiums are received by the insurance company. This ensures that employees are guaranteed a pension at retirement, even if the firm ceases operations.
A defined-benefit pension plan promises to pay a specified amount to each person who retires after a set number of years of service. These plans pay no taxes on their investment income.
Normal cost represents the portion of the economic cost of a participant's anticipated pension benefits allocated to the current plan year, usually distinct from accounting accrual cost or the cash outlay required in that year.
A pension plan is a retirement savings program sponsored by an employer that provides its employees with regular income post-retirement. There are various types of pension plans, each with different rules regarding contributions, benefits, and tax treatment.
