What is a pension?

Pensions are retirement plans that provide a regular income to employees after they retire from active work, typically funded by employers, employees, or both. The most common type is a defined benefit plan, which promises a specific monthly benefit upon retirement, often based on salary and years of service. Pensions help ensure financial security during retirement and are an important part of many employee benefit packages. In some cases, individuals may also contribute to personal pension plans separate from employer-sponsored programs.