defined contribution pension plan - Investment & Finance Definition
A retirement plan in which the level of contributions are fixed and most of the con- tributions come from employees. The contributions that employees make and the return on the investment determine the amount of pension funds paid. This type of plan provides an individual account for each plan participant. Employers can put away the smaller of $35,000 or 25 percent of the participant’s compensation (as of this printing) regardless of whether the employee makes the contributions or funds are provided through a separate profit- sharing plan. Gains or losses in the underlying investments and plan expenses affect the benefits paid.