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Contribution plan

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Con`tri`bu´tion plan
1.(Life Insurance) A plan of distributing surplus by giving to each policy the excess of premiums and interest earned thereon over the expenses of management, cost of insurance, and the policy value at the date of computation. This excess is called the contribution of the policy.


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Defined contribution plans are a more recent development.
Defined Contribution Plans In a defined contribution plan, individual contributions which are paid into member accounts (either from member salaries or contributions) are invested usually in the stock market, and all negative and positive investment returns are credited into the members account.
According to a survey conducted by the International Foundation of Employee Benefit Plans, the recession has forced both defined benefit plan sponsors and defined contribution plan sponsors to make changes to their retirement coverage and plan design.
 
 
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