HR Glossary

Defined Contribution

Defined contribution is a type of retirement plan that clearly defines the amount of contributions, which both the employee and employer pay on a regular basis.

what-is-defined-contribution

Defined contribution definition

Defined contribution is a type of retirement plan that clearly defines the amount of contributions, which both the employee and employer pay on a regular basis.

How defined contribution works

In defined contribution plan the employee gives a fixed amount or a percentage of his/her paychecks in an account that is intended to fund his/her retirement and the employer matches a portion of employee contributions. The most common type of defined contribution plan is a savings and thrift plan.

The benefits payable at retirement depend on several factors including future investment return and annuity rate at retirement.

Advantages of defined contribution

This type of retirement plan is generally tax-defferd and generally allow balances to grow larger over time compared to taxable accounts.

Defined contribution plans also include automatic participant enrollment, automatic contribution increases, hardship withdrawals, loan provisions and catch-up contributions for employees age 50 and older.

See TalentLyft in action

Applicant Tracking, Recruitment Marketing, Sourcing and Talent CRM software are powerful alone, but unstoppable when used together!


Related content

  • Benefits administration is the process of creating, updating and managing benefits for the employees of an organization, generally assigned to the HR function.Benefits administration definitionBenefits administration...

  • Coaching refers to a method of training, counselling or instructing an individual or a group how to develop skills to enhance their productivity or overcome a...

  • A career assessment test is a standardized evaluation tool designed to gather information about an individual's interests, skills, personality traits, and values to provide insights and...

  • Due diligence refers to the process of investigating and assessing a person, business or details of an investment to assess suitability, risk, potential value and reward...

Explore more topics

  • Recruitment Trends

    Stay up-to-date with the latest trends shaping the recruitment industry. From AI and automation to remote hiring and employer branding, discover how modern recruitment strategies are evolving. Learn to adapt to these trends and enhance your talent acquisition process to attract top candidates in a competitive market.

  • Tech Recruiting

    Master the art of recruiting top tech talent in a competitive market. Learn strategies for sourcing, attracting, and assessing skilled candidates in IT, software development, and other tech fields. Stay ahead with the latest tools, techniques, and trends to secure the best talent for your tech roles.

  • Recruitment by Industry

    Tailor your recruitment strategies to fit specific industries. Learn the unique challenges and best practices for hiring in sectors like healthcare, tech, retail, finance, and more. Discover industry-specific approaches to sourcing talent, crafting job descriptions, and optimizing your recruitment efforts for success.

  • Employee Management

    Employee Management: Discover the essential tools, tips, and processes to build and lead a winning team. Learn how to effectively manage performance, foster collaboration, and create a positive work environment that drives success. Implement best practices to optimize productivity and ensure your team reaches its full potential.

  • Candidate Relationship Management

    Improve your hiring process with effective Candidate Relationship Management (CRM). Build and nurture strong relationships with candidates by leveraging CRM tools to engage, communicate, and maintain long-term connections. Enhance candidate experience, increase retention, and create a robust talent pipeline for future hiring needs.

  • Successful Recruiter

    Discover the key traits, strategies, and tools that make a recruiter successful. Learn how to build strong relationships, source top talent, and navigate the hiring process efficiently. Equip yourself with the skills and techniques to consistently find and secure the best candidates for your organization.

Simple and affordable recruitment software