A pension is a retirement plan that provides income to individuals after they retire from their job or career. It is a form of financial arrangement where an individual or an employer contributes money into a pension fund during the individual’s working years.
The contributions are then invested with the goal of generating returns and growing the fund over time. When the individual reaches a certain age, typically around 65, they become eligible to receive regular pension payments, which act as a replacement for their regular income during retirement.
The amount of pension payments they receive is usually based on their earnings history, years of service, and the specific pension plan’s formula. Pensions can be offered by employers, labor unions, governments, or self-funded through personal savings or investment accounts. They aim to provide individuals with a stable and reliable source of income during their retirement years, ensuring financial security and peace of mind.