Hampshire County Retirement System

What is difference between DB & DC plans?

Defined Benefit vs Defined Contribution

Defined Benefit Plans

Massachusetts Public Employee

Hampshire County Retirement System

Defined Contribution Plans

401(k)’s, 457(b)’s, 403(b)’s, IRA’s,

Deferred Comp., 458’s, etc…

Benefit Formula =

Age, Service, & Average Salary

Benefit Formula =

Age, $ Contributed, & Investment Earnings

Benefit Amount = % of Salary

(Not based on Contributions or Investment Gains/Losses)

Benefit Amount = % of Account Balance

(Based on Contributions plus Investment Gains/Losses)

Benefit Amount guaranteed by law

(not based on account balance)

Benefit Amount not guaranteed (based on account balance)

Monthly Payments guaranteed for Lifetime (cannot outlive benefit payments)

Monthly Payments not guaranteed for lifetime (can outlive benefit payments)

Cost-of Living provisions

No Cost-of-Living provisions

Mandatory Participation

Participation may be voluntary

Mandatory Contribution Rate

Contribution rate may be voluntary

Disability Provisions

No Disability Provisions

Trustee Directed Investment

Individual Directed Investment

Investment Risk = Employer

Investment Risk = Participant

No administrative fees to participant

Administrative fees charged to participant

No Liens or Attachments allowed on contributions of actively employed members

No guaranteed protection from Liens or Attachments

Limited Liens or Attachments allowed for Child Support and Domestic Relations Orders

No guaranteed protection from Liens or Attachments

For more information click here

Appears in: General FAQ , Active Members