Pension broadly refers to retirement income, though it often specifically means defined benefit plan payments. Pensions provide income security in retirement, replacing earned wages with regular payments. Sources include employer plans, government programs, and personal savings.
State Pensions
Most countries have government pension programs providing baseline retirement income. These are funded through payroll taxes paid during working years. Benefits typically relate to earnings history and contribution period. State pensions aim to prevent poverty in old age.
Occupational Pensions
Employer-sponsored pensions supplement state benefits. These may be defined benefit plans promising specific income or defined contribution plans where outcomes depend on contributions and investment returns. Many countries mandate or incentivize employer pension provision.
Global Variations
Pension systems differ substantially between countries. Some rely primarily on generous state pensions. Others emphasize private provision with tax incentives. Understanding local pension landscape helps design competitive benefits and ensure compliance with mandatory requirements.