What does corporate annuity refer to?

A corporate annuity, also known as a corporate pension plan or a defined benefit plan, is a type of retirement savings plan offered by a company to its employees. The plan is typically funded by the employer and provides employees with a guaranteed income stream during their retirement years. In a corporate annuity, the employer typically makes regular contributions to the plan, which are then invested to generate returns. The employer bears the investment risk, and the ultimate payout to the employee is based on a predetermined formula that takes into account factors such as salary, years of service, and age at retirement. Corporate annuities are designed to provide employees with a stable and predictable source of income in retirement, and they are often seen as a valuable employee benefit. However, they also place financial obligations on the employer, as they are responsible for funding the plan and ensuring that it is managed prudently to meet the future financial needs of retirees. In recent years, many companies have shifted away from offering traditional corporate annuities in favor of defined contribution plans, such as 401(k) plans, which place more of the investment and longevity risk on the employee. However, corporate annuities continue to be an important part of the retirement savings landscape for many employees, particularly in industries with a strong tradition of providing pensions.