Finance glossary
Pension
Definition
An employer-funded plan paying retirees a set income.
A pension, or defined benefit plan, promises retirees a guaranteed income based on salary and years of service, with the employer bearing the investment risk. Once common, pensions have largely given way to defined contribution plans like the 401(k) in the private sector.
In a sentence
Her employer's pension promised a guaranteed income for life based on her final salary.
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