These plans, also known as 'Final Salary Schemes', have a guaranteed retirement benefit based on the final salary and length of service of an employee.

In most circumstances the plan would be administered in two distinct parts - investment and administration. The employer is entirely responsible for funding the guaranteed benefit and, therefore, will dictate the investment policy. The calculation of benefit is separate from the fund itself and will be administered by an actuarial service, usually independent of the company.

As it is the employer that is guaranteeing the benefit, they may decide to only partially fund the liabilities and pay the balance out of revenues when the liability is due. The employer receives all of the investment gains (and bears any losses) and, therefore, will need to know, on a periodic basis, the difference between the fund value and the accrued liabilities.

An employee may be allowed to buy extra years of service by contributing to the fund either by regular instalments or by Additional Voluntary Contributions (AVCs). AVCs are where an employee is able to add additional contributions to their plan, either by a lump sum or by regular instalments.

A Defined Benefit Plan with Generali Worldwide

• Generali Worldwide provides a full service for the investment element of a Defined Benefit Plan and works either with the employer's own actuarial consultants or recommends a Guernsey-based actuarial service to provide liability calculations.
• Generali Worldwide provides a guaranteed return fund (Deposit Administration Fund), which is very popular with employers and is often selected as a major part of a Defined Benefit Plan. The Deposit Administration Fund is available in US dollar, euro, sterling and Swiss franc along with a full range of unit-linked funds - to find out more about the funds available, please click here.
• Generali Worldwide collects all premiums and invests them as directed by the employer and fund valuations are prepared and benefits paid as requested by the actuarial consultant or the employer/ trustees.