High Quality Content by WIKIPEDIA articles! In economics, a defined benefit pension plan is a major type of pension plan in which an employer/sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee`s earnings history, tenure of service and age, rather than depending directly on individual investment returns. It is `defined` in the sense that the formula for computing the employer`s and employee`s contributions is known in advance. In the United States, 26 U.S.C. § 414(j) specifies a defined benefit plan to be any pension plan that is not a defined contribution plan where a defined contribution plan is any plan with individual accounts. A traditional pension plan that defines a benefit for an employee upon that employee`s retirement is a defined benefit plan.