A defined contribution plan is a common workplace retirement plan in which an employee contributes money and the employer typically makes a matching contribution. Two popular types of these plans are 401(k) and 403(b) plans. ... There are two types of defined benefit plans: traditional pensions and cash-balance plans.

What type of pension is a defined contribution?

Defined contribution (DC) schemes are occupational pension schemes where your own contributions and your employer's contributions are both invested and the proceeds used to buy a pension and/or other benefits at retirement.

How do Defined contribution pension plans work?

In a defined contribution pension plan, you know how much you will pay into the plan but not how much you will get when you retire. Usually you and your employer pay a defined amount into your pension plan each year. The money in your defined contribution pension is invested in one or more products on your behalf.