Fixed-percentage-of-profits formula

{
  "id": "MLC-T-ECS-000744",
  "term": "Fixed-percentage-of-profits formula",
  "field": "Economic statistics",
  "definition": "Calculation method in deferred profit-sharing plans in which the employer contributes a fixed percentage of its total annual profits to the plan.\n\nNote: For example, no matter what the level of profits, 5 percent is contributed to the plan. Profits may include those for the entire company or just those in a specific business unit. In a variation of this formula, employers set aside a reserve amount of profits (e.g., $1 million) and pay only a fixed percentage of any profits above this amount into the employees’ defined contribution plan.",
  "references": [
    "BLS Glossary"
  ],
  "url": "https://mlchart.com/terminology/economic-statistics/fixed-percentage-of-profits-formula/"
}