Defined benefits are guaranteed retirement benefits. They are available through a defined benefits plan offered through employers. The benefits are a guaranteed monthly income for the life of the beneficiary. The Pension Benefits Guaranty Corporation oversees these plans and guarantees benefit payments.

A defined benefits plan is funded by the employer on behalf of the employee. There are advantages for an employer to offer a defined benefits plan. The plan is an attractive benefit option for prospective employees and contributions into a defined benefits plan are a tax deductible expense. Contributions grow tax deferred until withdrawn at retirement age, 59 1/2.

Defined benefits are usually calculated by considering an employee's annual salary and length of service. The employer can determine what factors to include into the benefits formula. Benefits may also be adjusted annually with the rate of inflation. If a beneficiary passes away the spouse may be entitled to a reduced benefit or a lump sum settlement. In the case of reduced spousal benefits there are ways to utilize a proper life insurance contract to offset the affect of the reduced benefit. Your investment or insurance professional will be able to help you create a plan to protect your total benefit.

Defined Benefits Are Guaranteed by the PBGC

PBGC is the Pension Benefits Guaranty Corporation. The PBGC was created in 1974 by the Employee Retirement Income Security Act. The goal of the PBGC is to ensure timely payments of benefits, keep pension insurance premiums low, and encourage the use of defined benefits plans. The PBGC is the governing body that covers most employers' plans.