Employer based retirement plans generally fall into two categories:
A defined benefit plan or a defined contribution plan.
- A defined benefit plan specifies exactly how much retirement income employees will get once they retire.
- A defined contribution plan only specifies what each party – the employer and employee – contributes to an employee’s retirement account.
Defined Benefit: MOSERS
A defined benefit plan, such as the MOSERS plan, guarantees a specific monthly pension based on a formula. With MOSERS, when a member retires the formula calculates a monthly payment based on the member’s final average pay, length of service, and a percentage set by the MOSERS Plan option the employee participates (MSEP, MSEP 2000, MSEP 2011). Monthly payment continues for the life of the retiree. This is not an individual retirement account with a fixed amount of money that can be exhausted, therefore a member cannot outlive the retirement funds.
- Find out more about MOSERS during MOSERS Month.
Defined Contribution: CURP, 403(b), 457(b)
A defined contribution plan, such as CURP, 403(b),or 457(b), has a separate tax deferred investment account. The account is funded by contributions from the employee and/or employer. When employees retire, they take the account and accrued assets with them. Although the contribution is defined, it is impossible to know at any given point how much the account will be worth at retirement because the investments will be influenced by market forces.
- CURP enrolled employees may elect to transfer to MOSERS MSEP 2011 plan after participating in CURP for at least 6 years.