Definition Of Credit, Pension Plan In Insurance

Definition of "Credit, pension plan"

Chad Morton, Real Estate Agent Paragon Realty, Llc

Value of benefit or contribution allocated to an employee under a pension plan; method of determining benefits due a retired employee. Each private pension plan establishes rules for awarding credits to employees, taking into account age, amount of time with the employer, number of days worked per year, breaks in service, maximum salary, and position in the company. For an employee who joined a firm before the plan was put in place, the company computes past service credit, crediting work done prior to establishment of the plan. Ultimately, credits determine the level of pension income the employee receives upon retiring.