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Defined benefit pension plan

A retirement plan that uses a specific predetermined formula to calculate the amount of an employee’s future benefit. The most common type of formula is based on the employee’s terminal earnings. Under this formula, benefits are based on a percentage of average earnings during a specified number of years at the end of a worker’s career—for example, the highest 5 out of the last 10 years—multiplied by the maximum number of years of credited service under the plan. In recent years, a new type of defined benefit plan, a cash balance plan, has become more prevalent. Under this type of plan, benefits are computed as a percentage of each employee’s account balance. Employers specify a contribution—usually based on a percentage of the employee’s earnings—and a rate of interest on that contribution that will provide a predetermined amount at retirement, usually in the form of a lump sum. In the private sector, defined benefit plans are typically funded exclusively by employer contributions. In the public sector, defined benefit plans often require employee contributions.

Defined contribution plan

A retirement plan in which the amount of the employer's annual contribution is specified. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employer contributions and, if applicable, employee contributions) plus any investment earnings on the money in the account. Only employer contributions to the account are guaranteed, not the future benefits. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. The most common type of defined contribution plan is a savings and thrift plan. Under this type of plan, the employee contributes a predetermined portion of his or her earnings (usually pretax) to an individual account, all or part of which is matched by the employer.

Political Infrastructure

(from the Florida Professional Firefighters WEB site): The Florida Professional Firefighters, Inc. is a State Association chartered by the International Association of Fire Fighters, AFL-CIO-CLC....annual budget of over $2,000,000...The major and primary service provided by the F.P.F. is to be a governmental relations advocate, and conduct a year-round legislative and lobbying program in Florida's State Capitol. This activity is supported by an aggressive statewide political action agenda....Most, if not all, of the benefits and protections presently enjoyed by Firefighters and Emergency Services Personnel under state law or rule have been acquired as a direct result of, or have been influenced by, our legislative efforts...the F.P.F. offers to teach, instruct, and assist its members in advancing their profession by political involvement at all levels of government...

The objectives of this organization shall be to: ...Sponsor, promote and protect all forms of Legislation advancing the interests and welfare of its members, together with strong and continual support for adequate fire and emergency services within the State of Florida.


Defined contribution plan funding level parameters: actuary assumptions

  • mortality rate: estimate of how long a pensioner will live to collect benefits
  • investment return: assumption of how much the plan investments will earn
  • retirement age: age when each employee retires (1yr increase reduces total pension liability by 2-4%9)
  • disability rate: rate employees go on disability and begin to recieve pension income
  • termination rate
  • salary increases: projection of raises
  • cost of living adjustment: yearly increase in monthly retirement benefit
  • payroll growth: projection in the increase in number of employees


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