A pension plan where the amount that an employee is to receive upon retirement is set forth in advance is referred to as a:

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A defined-benefit plan is a pension plan where the amount that an employee is to receive upon retirement is set forth in advance, usually based on a formula which considers the employee's years of service, salary, and age. The employer bears the investment risk and is responsible for ensuring that the plan has enough assets to pay the benefits promised to the employees. Contributory and noncontributory plans refer to whether the employee is required to contribute to the plan or not, while a defined-contribution plan is one in which the employer contributes a defined amount to the plan but the ultimate benefit to the employee is dependent on investment performance.

A Pension Plan Where the Amount That an Employee Is