Defined Benefit (DB) Pension
An employer pension that promises a specific, calculated income for life, based on salary and years of service.
Last reviewed July 23, 2026
Reviewed for accuracy and clarity by Sandeep Singh before publication. Learn about our editorial process.
What it means
A defined benefit pension pays a guaranteed monthly amount in retirement, calculated from a formula — typically years of service multiplied by a percentage of salary. The employer (or pension plan) carries the investment risk, not the employee.
Why it matters
Having a DB pension changes the retirement math significantly — it can cover a large share of retirement income on its own, meaning personal savings may need to fill a much smaller gap than someone without one.
Common misunderstandings
- It's different from a defined contribution (DC) pension, where the employee bears the investment risk and the eventual income isn't guaranteed.
- DB pensions are increasingly rare outside the public sector — don't assume one exists without checking.
Where you'll see it
On an employee's pension statement, and in any retirement-income-gap calculation.
Related terms
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