Which plan typically offers less risk to employees regarding retirement income?

A defined benefit plan typically offers less risk to employees concerning retirement income because it guarantees a specific payout upon retirement, usually based on a formula that includes factors such as salary history and years of service. This type of plan means that the employer bears the investment risk and is responsible for ensuring that there are sufficient funds to meet the promised benefits. Employees, therefore, have predictable and stable income during retirement without the uncertainties associated with market fluctuations.

In contrast, defined contribution plans, user-directed investment plans, and employee stock ownership plans place more responsibility on the employee to manage their investment choices and outcomes. These plans often depend on market performance and can lead to varying retirement income, exposing employees to higher financial risk based on their investment decisions and the market's volatility.