What Kind Of Retirement Plan Is PERS?

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    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Many retirement plans share that acronym.  There are two basic types of retirement plans.  The first is a defined benefit plan.  A defined benefit plan computes the retirement benefit based upon a formula published in the plan.  It normally takes into consideration years of service, highest income and age.  If employees contribute the contribution is normally a percentage of their income.  The second is a defined contribution plan.  This plan normally allows the employee to contribute to their own retirement program.  The employer may make an annual contribution to the plan or may match employee contributions to a certain limit.  The benefit is then computed based upon the value of the fund at the time of retirement or may often be taken in a lump sum.
    Answered on May 13, 2014
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