Traditional Defined Benefit (DB) Pension Systems
Each party contributes to the retirement fund; the
employee contribution is almost always fixed—i.e., does
not vary from one year to the next.
The retirement benefit is guaranteed, and is usually
based on age, “final” salary, and years of service: e.g.,
“2% @ 55”
The money is managed in a pool to reduce overhead.
Investment risk is the responsibility of the employer.
Risks are spread over time.
Often provide inflation protection and disability and
Have some degree of “portability” depending on
reciprocal agreements with other public agencies.