Defined benefit plans are popular with collective bargaining groups. They are also attractive to businessowners that have older key employees, because defined benefit plan funding weighs in favor of participants who are closest to retirement and who have the greatest projected benefits. The employer's contribution requirement is recalculated annually based on projected retirement benefits. Because the employer's funding requirement changes annually and, once determined, must be paid, defined benefit plans are generally less popular than defined contribution plans where funding costs are, by definition, clearly predictable and often discretionary.

Because defined benefit plans recalculate funding requirements annually, there is an additional layer of actuarial and administrative support required of these plans that one does not find with defined contribution plans. For this reason, plus the fact that defined benefit plans are generally more expensive to install and administer than defined contribution plans, defined benefit plans are most commonly associated with larger corporations and small businesses that need to maximize plan funding to assure a specified income for the older owner-employee. Financially sound businesses with older owners and key employees will appreciate how a defined benefit plan can make up for lost time in providing key employees with a substantial retirement income.

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