Pension Plan 2020-02-03 08:00:00

Pension Plan

A pension plan is a type of retirement plan where employees contribute to a pool of funds that are used to pay for the employees’ retirement. The employer controls the type of investments in the plan, although some plans may have a voluntary investment component.

There are two types of pension retirement plans. The older type is called a defined-benefit plan. In this plan, the employer invests the pension's contributions into low-risk assets. Retirement payments are determined from a formula based on years of service and independent of the retirement fund’s performance. The more modern version is called a defined-contribution plan where employee plan contributions are usually matched by the employer. In these plans, retirement benefits are dependent on the plan’s performance.


Manage risk and help maximize opportunity

Investment Property Wealth Management eBook

Download the eBook