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In a defined benefit pension plan, your benefit at retirement is determined by a formula based usually on your years of service and final average salary often with deductions for expected social security payments. Many have formulas that will give full salary after some years of service.

These plans have benefits that are defined by your length of service and salary. Your employer pays for them effectively by purchasing an annuity to make the payments once you retire. The cost of the annuity is determined by your age, the benefit amount, and interest rates when purchased. The contribution the company makes to your pension account increases as you get closer to retirement.

The defined contribution or cash balance plan works more like a company funded IRA or 401K plan. The company makes a fixed contribution to the plan based on your salary each year. At retirement you may buy an annuity with the account balance, but all the other risks are yours. Your pension is determined by how ever much money happens to be in your account.

Companies find defined benefit plans costly and they especially don't like the fact that changes in interest rates cause the pension liability amount in the financial reports to change. Decreasing interest rates causes the liability to increase because more $$ are required to buy that defined benefit annuity.

Whether or not your old or new plan will pay you more at retirement depends on the details of the plan. But most company's defined benefit plans will pay about one-third salary after 10 years service and full salary after 30 years. Defined benefit plans are also inflation adjusted because the benefit is based on your final salary--even though your starting salary 30 years ago was probably ridiculously small by today's numbers. Defined contribution plans have to have some investment income associated with them, and anything is possible. But just like in 401K plans, contributions made in the last 10 years are likely to be peanuts. The real power comes from investment income on contributions made 20 or more years ago.
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