Quote:
Originally Posted by Bobble
No, you don't get the money you put into it. That's a defined contribution plan and is what the university wants to move to.
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That's not technically correct. For a Defined Contribution plan, the university just deposits $X into an individual's "retirement account" every year. This account can either grow or decline through the years depending on stock market performance. Once that individual retires, the balance of the account is generally used to purchase an annuity to provide the retiree with an income every year. That means once retired, the account might be worth a lot (if the market did well on average), or may be lacking (if the market did poor on average). Either way, the University isn't on the hook for anything more than the yearly contribution, meaning they don't have the liability they do with Defined Benefit plans.