defined-benefit pension scheme


defined-benefit pension scheme
= DB scheme
An occupational pension scheme in which the rules specify the benefits to be received on retirement and the scheme is funded accordingly. The benefits are normally calculated on a formula incorporating years of service and salary levels (see final salary scheme). Accounting for pension costs poses a number of difficulties for accountants; the basic regulations are set out in Statement of Standard Accounting Practice 24, although Financial Reporting Standard 17, Retirement Benefits, and International Accounting Standard 19, Employee Benefits, should also be consulted.
In recent years rising costs have led many companies to close their existing DB schemes to new employees, who are obliged to join defined-contribution pension schemes

Accounting dictionary. 2014.

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