Page 119 - SBR Integrated Workbook STUDENT S18-J19

Employee benefits

Pension plans

1.1 Types of pension plans

There are two broad types of pension plan:

 defined contribution plans

 defined benefit plans.

The accounting treatment of these plans is very different.

1.2 Definitions

Defined contribution plans are where the entity pays fixed
contributions into a separate entity and has no legal or constructive
obligation to make further contributions.

A defined benefit plan is one which is not a defined contribution plan.

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