"At first blush, having an ESOP company adopt a defined benefit pension plan may seem counter-intuitive. After all, why add an obligation to fund a second plan to a company already challenged to fund liabilities associated with its primary retirement vehicle? The reality is quite different, however, because the costs associated with funding the defined benefit plan reduce the value of the company and the associated repurchase liability. Further, the employees do not lose value. Their benefit will be paid to them from the defined benefit plan upon retirement."

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