Which type of pension and retirement plan is known to be portable?

A defined contribution plan is characterized by its portability, meaning that employees can take their vested benefits with them when they change employers. This type of plan typically allows individuals to contribute a certain percentage of their salary, and employers may also contribute, with the total contributions invested in various financial instruments. The account balance is linked to the performance of those investments, and when an employee leaves, they can roll over their balance into another retirement account without incurring taxes or penalties, preserving their savings for future retirement use.

In contrast, defined benefit plans often do not offer the same level of portability. These plans provide a predetermined retirement benefit based on factors such as salary history and length of service, and typically require employees to remain with the employer for a specific duration to benefit fully. Hybrid plans may have features of both, but their portability can vary widely depending on how they are structured. Government employee retirement plans frequently have specific rules about benefits that may limit portability, making them less flexible than defined contribution plans. Thus, defined contribution plans stand out as the most portable retirement option.