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Defined Contribution Plan
A defined contribution plan is a retirement plan where the amount of your employer’s annual contribution is specified. Your employer, and yourself pay fixed contributions into your account.
The contributions are invested (example is in the stock market) and the returns on the investment (which may be positive or negative) are credited to your account. On retirement, your account is used to provide retirement benefits.
Defined contribution plans have become very popular in recent years and are now the dominant form of plan in the private sector. Defined contribution plans are being offered more often since employers see pension contribution plans a large expense they can avoid.
Usually you will have control over the investments of the plan. However, the plan sponsor retains a significant degree of fiduciary responsibility over investment of plan assets, including the selection of investment options and administrative providers.
