Under a defined-benefit plan the employer promises to provide each employee with a specified amount of benefits upon retirement.  Such a guarantee is somewhat more difficult than promising to make specified contributions, because the benefits are by the employees in the future and therefore uncertain.  The benefits must be predicted, and the employer must contribute enough cash so that the contributions plus the earnings on the assets in the fund will be sufficient to provide the promised benefits as they come due.  The employees of most major U.S. companies, as well as health care workers, are covered by defined-benefit plans.  A survey conducted by the U.S. Labor Department indicated that the percent of U.S. employees covered by such plans….dropped from 63 percent in 1988 to 56% in 1995.”

In the past many employers under defined-benefit plans either set aside no funds or failed to set aside enough to cover their future pension obligations.  They simply paid the obligations as they come due, often out of the company’s current operating capital.  This practice not only represented poor financial management, but on occasion left retired employees short of their rightful pension benefits.  To help assure that employees received what was promised them.  Congress passed the Employee Retirement Income Security Act in 1974, which requires employers to fund their plans at specified minimum levels and provides other safeguards designed to protect employees.  This was one area of study that is covered when studying how to become a CPA.  As a health care worker, your defined benefit plan should be clear and serve the purpose of protecting and covering allied health professionals such as; sonographers.

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