Your Retirement Benefit

As a member of SERS, you belong to a defined benefit - or pension - plan. In general, there are three common types of employer-provided retirement plans:

Defined Benefit Plans

Plans in which an employer promises a specific monthly payment upon retirement, based on an employee's earnings history, years of service, and age (or other factors). These pension plans - including SERS - are defined benefit plans.

The benefit is "defined" because the formula for determining the amount of the payment is known by both parties in advance. Another typical feature of these plans is that employees do not participate in managing financial assets, which are managed centrally and professionally.

Defined Contribution Plans

Plans in which an employer promises to put a specific amount of money in an employee's retirement account, then retirement payments depend on the accumulation of contributions made to and the investment performance of the assets in his or her account. 401(k), 403(b), and 457 plans are common examples of defined contribution plans.

The contribution is "defined" because the amount the employer will contribute is known by both parties in advance. Another typical feature of these plans is that employees are provided with an array of pre-selected investment options and are responsible for managing their own assets.

Hybrid Plans

Plans in which an employer provides some level of both a defined benefit monthly payments promise and a defined contribution account deposit. These vary greatly across employers.