What is a common feature of a defined benefit pension plan?

A defined benefit pension plan is characterized by providing specified benefits to retirees based on predetermined factors, primarily the employee's earnings and years of service. This feature guarantees that employees will receive a certain amount of income during retirement, which is calculated using a formula that typically accounts for their salary and the duration of their employment with the company. This guarantee is a core aspect of defined benefit plans, as it offers a predictable income stream for retirees.

The other options do not align with the fundamental nature of defined benefit pension plans. For example, contributions do not typically vary year by year in a defined benefit plan; instead, the employer usually makes consistent contributions based on actuarial assessments to fulfill the promised benefits. Additionally, benefits are not contingent upon market performance, as defined benefit plans operate on a set formula rather than fluctuating investment returns. Finally, defined benefit plans generally consider both employee and employer contributions as part of the funding, rather than only focusing on employee contributions. This highlights the collaborative nature of funding such pension plans, ensuring that both parties play a role in securing the promised benefits for the employee.