Allocated Benefits

AAA

DEFINITION of 'Allocated Benefits'

A type of payment that comes from a defined-benefit retirement plan. Allocated benefits are passed on (allocated) to the plan participants once the insurance company has received its premiums. Allocated benefits provide guaranteed retirement income to plan participants that is ultimately backed by the insurance carrier (and the PBGC).

This term can also refer to the maximum amount that can be paid for a given service that is itemized in a contract.

INVESTOPEDIA EXPLAINS 'Allocated Benefits'

Because the benefits that have been purchased are paid up, the employees can rest assured that they will receive those benefits even if their former employer goes bankrupt. These payments are regulated under ERISA guidelines.

RELATED TERMS
  1. Employee Retirement Income Security ...

    The Employee Retirement Income Security Act of 1974 (ERISA) protects ...
  2. Pension Benefit Guaranty Corporation ...

    A non-profit corporation that functions under the jurisdiction ...
  3. Premium

    1. The total cost of an option. 2. The difference between the ...
  4. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  5. Insurance

    A contract (policy) in which an individual or entity receives ...
  6. Portable Benefits

    Benefits that have been paid into or accrued in an employer-sponsored ...
Related Articles
  1. An Overview Of The Pension Benefit Guaranty ...
    Retirement

    An Overview Of The Pension Benefit Guaranty ...

  2. Is Your Defined-Benefit Pension Plan ...
    Retirement

    Is Your Defined-Benefit Pension Plan ...

  3. Variable Vs. Variable Universal Life ...
    Retirement

    Variable Vs. Variable Universal Life ...

  4. Life Insurance: How To Get the Most ...
    Retirement

    Life Insurance: How To Get the Most ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center