A defined benefit plan, also known as a pension plan, is a type of retirement plan offered by an employer that guarantees a specified retirement benefit to employees upon reaching retirement age. In a defined benefit plan, the retirement benefit is determined based on a formula that considers factors such as an employee's salary history, years of service, and a predetermined benefit formula established by the plan.

Example
An employer offers a defined benefit plan to its employees. The plan states that employees will receive a retirement benefit equal to 1.5% of their average salary for each year of service. An employee who has worked for 30 years and has an average salary of $60,000 would receive an annual retirement benefit of $27,000 (1.5% x 30 x $60,000). The employee can choose to receive the benefit in monthly installments after reaching the plan's designated retirement age.