Unit Benefit Plan
What Does Unit Benefit Plan Mean?
A unit benefit plan is a retirement plan established and sponsored by an employer. It offers retiring employees an annual benefit calculated either as a fixed dollar amount or as a percentage of their annual salary for each year of service, typically ranging from 1.25% to 2.5%. Similar to certain life insurance policies and annuities, this pension plan ensures a steady income for individuals after retirement.
Insuranceopedia Explains Unit Benefit Plan
A unit benefit plan is a type of defined benefit plan designed for retiring employees in a private company. The retirement benefit is calculated by multiplying the number of years of service by the benefit percentage and the average career salary. For example, an employee who has worked for 30 years with an average final salary of $100,000 under a sponsored unit benefit plan at 2% would receive an annual retirement benefit of $60,000.
