Allocated Benefits

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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.

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