Pension Plan

A pension plan is a type of retirement savings plan sponsored by an employer that provides retirement income to employees. The employer and employee make contributions to the pension plan during the employee’s working years, which are then invested by the plan administrator with the goal of generating returns that can be used to fund retirement benefits.

Pension plans may be defined benefit plans, which promise a specific benefit amount based on factors such as salary and years of service, or defined contribution plans, which specify the number of contributions made by the employer and employee, but do not guarantee a specific benefit amount.

Pension plans are typically subject to government regulations and must meet certain requirements to qualify for tax benefits. Many countries have implemented pension plans as a means of providing retirement income security for their citizens.