Certainly, as the baby boomer generation is retiring, more people want to understand corporate pension plans and how they work. Many investment firms, such as EnTrust Capital with managing partner Gregg Hymowitz, specialize in managing corporate pension funds.
Two of the most common types of corporate pension funds are defined-benefit plans and defined-contribution plans. Defined-benefit plans establish that an employee’s retirement benefits are tallied based on a set formula. This formula usually takes into consideration the length of employment and the salary history of the employee. The employer is responsible, in these cases, with funding the plan. With defined-contribution plans, on the other hand, there isn’t a set amount that the employee will receive from the plan upon retirement. The payout is dependent upon the success of the investment plan.
At this time, many companies are switching from defined-benefit to defined-contribution plans, as they require less from the employer. This is, of course, more beneficial for the employer, but less so for the employee in many cases.