Define pension?

A pension is a fixed sum of money paid regularly to a person, typically after retirement, as a form of income support. It is usually provided by an employer or government agency based on the individual's years of service and contributions to a pension plan.

A pension is a regular payment made to a person who has retired from employment, typically from a fund contributed to by both the employer and the employee. It provides a source of income during retirement and can be paid as a fixed amount or as a percentage of the employee's final salary. Pensions can be defined benefit or defined contribution plans:

Defined Benefit Plan:
- Guarantees a specific retirement income based on a formula that considers factors such as salary, years of service, and age of retirement.
- The employer bears the risk of ensuring the promised benefits are fulfilled, regardless of investment performance.

Defined Contribution Plan:
- Contributes a set amount to an individual account on the employee's behalf.
- The investment returns and contributions determine the retirement income, which is not guaranteed.
- The employee typically has more control over investment decisions.

Pensions can be beneficial in providing financial security during retirement and supplementing other sources of income, such as Social Security or savings.