Final answer:
Defined benefit pension plans can be integrated with Social Security. They guarantee a monthly benefit and can consider Social Security benefits in their calculations, contrasting with defined contribution plans like 401(k)s which are more focused on individual investment contributions.
Step-by-step explanation:
Among the retirement plans available, defined benefit pension plans can be integrated with Social Security. A defined benefit plan is a traditional pension plan where the employer guarantees a specified monthly benefit upon retirement, which can be calculated using factors such as salary history and duration of employment. These plans are becoming increasingly rare, giving way to defined contribution plans like 401(k)s and 403(b)s, which allow the worker to invest contributions from the employer (and often from the employee) in various investment options. Defined contribution plans are portable, as they can be transferred if an employee moves to a different employer, and they are also tax-deferred.
Unlike defined contribution plans, defined benefit plans can be designed to take into account an employee's Social Security benefits when calculating the retirement benefit, often resulting in lower employer costs for pension liabilities. These integrations are known as Social Security integrations, or pension offsets, and are based on the principle that pensions, Social Security, and personal savings are three pillars of retirement income.