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.

BREAKING DOWN '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. Allocated Funding Instrument

    A specific type of insurance or annuity contract that pension ...
  2. Benefit Allocation Method

    The benefit allocation method is a means of funding a pension ...
  3. Target-Benefit Plan

    A benefit plan that is similar to a defined benefit plan since ...
  4. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  5. Pension Benefit Guaranty Corporation ...

    A non-profit corporation that functions under the jurisdiction ...
  6. Cash Balance Pension Plan

    A pension plan under which an employer credits a participant's ...
Related Articles
  1. Financial Advisor

    An Overview Of The Pension Benefit Guaranty Corporation (PBGC)

    Find out how this "retirement lifeguard" can save drowning plans, and why it's unlikely to be a long-term solution to the pension problem.
  2. Retirement

    Is Your Defined-Benefit Pension Plan Safe?

    Your plan may not last in a rocky market. Find out whether your savings will be affected.
  3. Retirement

    Why Own Life Insurance in a Qualified Retirement Plan?

    What are the pros and cons of owning cash value life insurance in a qualified retirement plan?
  4. Understanding Rules on Defined Benefit Pension Plans

    Defined benefit plans offer advantages to both employers and employees. Employers must understand the federal tax rules when establishing these plans.
  5. Personal Finance

    The Demise Of The Defined-Benefit Plan

    Experts are making bleak predictions for your post-work years. Be prepared and plan for your future.
  6. Financial Advisor

    The 401(k) Emergency Boomers Need to Address Now

    The asset allocations of Baby Boomers’ 401(k)s are dangerously out of balance. Here's how to remedy that.
  7. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  8. Retirement

    401(k): An Accidental Solution To The Retirement Problem

    The 401(k) is often a poor substitute for the defined-benefit plans it replaced, but there are steps you can take to make yours better.
  9. Personal Finance

    Job Hunting: Higher Pay vs. Better Benefits

    Focusing on pay when job hunting may be a mistake. Find out which benefits have the highest long-run payoff.
  10. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
RELATED FAQS
  1. What are my main rights as a 401(k) plan participant?

    Learn how under ERISA, 401(k) plan participants are guaranteed several important rights, including protections of their plan ... Read Answer >>
  2. How does a defined benefit pension plan differ from a defined contribution plan?

    Learn the differences between defined benefit plans and defined contribution plans when reviewing employer-sponsored qualified ... Read Answer >>
  3. What asset allocation should I use for my retirement portfolio?

    Learn the basics of planning an asset allocation strategy for retirement using risk constraints and return objectives to ... Read Answer >>
  4. What rate of return should I expect on my 401(k)?

    Learn which factors affect your 401(k) performance, and understand what a typical rate of return is for employer-sponsored ... Read Answer >>
Hot Definitions
  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  2. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  3. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  4. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  5. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  6. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
Trading Center