A defined benefit formula multiplies final average salary by years of service and an accrual rate

Popularity Index: 8 Updated at 2026-10-23 08:22 UTC

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A plan freeze stops accruals for new hires and sometimes for everyone already enrolled Cliff vesting at five years means leaving at four years and eleven months pays nothing from the employer side Benefit formulas that use career average earnings pay less than final salary ones for the same years of service Vesting requirements decide whether you leave with a benefit at all or only with your own contributions Buying service credit for earlier employment raises the formula benefit but costs its full actuarial value Waiving the joint and survivor annuity requires a spouse's written consent in most private plans Converting the pension to a lump sum uses the plan's own rate which is rarely the annuity you could buy outside A safe harbor design buys exemption from the testing rules by promising a minimum employer contribution every year A subsidized early retirement factor inside a defined benefit plan can be worth more than a year of salary The PBGC guarantees the monthly benefit up to a statutory cap if a single-employer plan runs out of money

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