What is a characteristic of a flat benefit plan?

A flat benefit plan is characterized by providing a set dollar amount for each year of service. This means that regardless of an employee's salary history or career earnings, the retirement benefits are calculated straightforwardly by multiplying a predetermined flat rate by the number of years the employee has worked.

This approach is notable because it simplifies the calculation of benefits and creates a predictable retirement income based on tenure rather than salary levels. It contrasts with plans that might calculate benefits based on average earnings or performance, which introduce more complexity and variability into the retirement payout.

In essence, the clarity and structure of a flat benefit plan make it easy for both employers and employees to understand how benefits are accrued, as the payout does not fluctuate based on an employee's salary or the investment returns but is solely tied to the length of service. This simplicity is particularly appealing for companies that want to offer straightforward retirement benefits.