A pension is a regular payment made to an individual, usually after they retire from their job. It is a form of retirement income provided by an employer or the government.
Related terms
401(k): This is a retirement savings plan offered by employers in which employees can contribute part of their salary on a pre-tax basis. The funds are then invested in various financial instruments to grow over time.
Defined Benefit Plan: A type of pension plan where the retiree receives a fixed amount based on factors such as years of service and final salary before retirement, regardless of investment performance.
Individual Retirement Account (IRA): An account individuals can set up with financial institutions to save money for retirement. Contributions may be tax-deductible, and earnings are tax-deferred until withdrawal.