A pension (/ˈpɛnʃən/; from Latin pensiō ´payment´) is a fund into which amounts are paid regularly during the individual´s working career, and from which periodic payments are ...
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made to support the person´s retirement from work. A pension may be:
a "defined benefit plan", where defined periodic payments are made in retirement (and the sponsor of the scheme (e.g. the employer) must make further payments into the fund if necessary to support these defined retirement payments), ora "defined contribution plan", under which defined amounts are paid in during the working life, and the retirement payments are whatever can be afforded from the fund.Pensions should not be confused with severance pay; the former is usually paid in regular amounts for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment before retirement.
