What is a key feature of the Defined Benefit Plan?

The key feature of a Defined Benefit Plan is that it guarantees a specific pension amount at retirement. This predetermined benefit is typically based on formulas that consider factors such as salary history and years of service. This type of plan provides a higher level of security for employees, as they can anticipate receiving a steady income during retirement, which is not reliant on market performance or investment choices.

Other options do not accurately represent the core characteristics of a Defined Benefit Plan. For instance, while some plans may involve employee contributions, it is not a requirement for qualification in all cases. Additionally, the payout of a Defined Benefit Plan is not variable; it is fixed based on the predetermined formula, unlike plans that depend on investment performance, which can fluctuate. Lastly, Defined Benefit Plans are primarily funded by the employer, ensuring that the promised benefits are met when the employee retires.