Dictionary of Business Terms: Pension Equity Plan (PEP)
Pension Equity Plan (PEP)
a type of defined-benefit pension plan design in which a participant's benefit is stated as a lump sum based on the participant's age, service, and average pay, where the average pay is usually based on only the final few years of employment.
Dictionary of Insurance Terms: Pension Equity Plan (PEP)
Pension Equity Plan (PEP)
modifications of the traditional defined benefit plan in which employees are credited with a specified percentage for each year of recognized service with the employer. Upon termination of service, the percentages are summed and multiplied times the final average pay. The resultant calculation is the employee's annual retirement benefit. These plans provide for an even accrual of the employee's retirement benefits and thus provide greater benefit for employees that have shorter periods of service.
