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Jump to navigation Jump to search This article is about the retirement income arrangement. The examples and perspective in this article may not represent a worldwide view of the subject. A pension is a fund into which a sum of money is added during an employee’s employment years, and from which payments are drawn to support the person’s retirement from work in the form of periodic payments. A pension may be a “defined benefit plan” where a fixed sum is paid regularly to a person, or a “defined contribution plan” under which a fixed sum is invested and then becomes available at retirement age.
The terms “retirement plan” and “superannuation” tend to refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms.