Brief Definition
Pension benefits refer to the retirement income that an employee receives after leaving employment, typically funded by contributions from both the employer and the employee. These benefits are part of a pension plan, which is a type of retirement plan designed to provide income to employees after they retire.
Further Explanation
Pension benefits refer to the retirement income that an employee receives after leaving employment, typically funded by contributions from both the employer and the employee. These benefits are part of a pension plan, which is a type of retirement plan designed to provide income to employees after they retire.
Example:
In a defined benefit plan, an employee might be promised a monthly benefit of $2,000 upon retirement, calculated based on their final salary and years of service. In a defined contribution plan, an employee and employer might each contribute 5% of the employee’s salary to a retirement account, which will vary based on investment performance.