A traditional pension plan is an employer-sponsored retirement plan that pays retirees a fixed amount that is based on number of years of service and salary history. The employer is liable for the full amount of the plan. Traditional pensions are defined-benefit plans and are guaranteed by the Pension Benefit Guaranty Corporation (PBGC). Employer-sponsored retirement plans such as 401(k), 403(b) and 457 plans are called defined-contribution plans. Defined-contribution plans are funded, in large part, by employee contributions. As a result, these plans are not guaranteed by the PBGC.