Defined Contribution Plans

Source: U.S. Bureau Of Labor Statistics, Program Perspective, Vol 2 Issue 6, November 2010

One of the most significant changes to American worker benefits in recent years is the change in employer provided retirement plans, most notably the wide-spread movement towards defined contribution plans, such as 401(k) and 403(b) that have occurred in private industry and to a lesser extent, in State and local government. Defined contribution plans are retirement plans that specify the level of employer contributions, if any, and place those contributions in individual accounts. The value of an individual account is determined by the amount of money contributed and the rate of return on the money invested over time.

Changes in the availability and usage of defined contribution plans can be measured by access and participation rates. An employee has access to a defined contribution plan if the employee is in an occupation that is offered the plan.

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