Private Pension Plan

What Does Private Pension Plan Mean?

A private pension plan is a pension plan issued by a private company, as opposed to one issued by a public institution or agency.

In the context of insurance, pensions are tools that are used similarly to life insurance policies for financial planning, since both can generate fixed income for retirement. Many private pension plans are structured as annuities, which turn a lump sum or set of contributions into regular payments once retirement begins.

Insuranceopedia Explains Private Pension Plan

While government and public agencies may provide pensions for their employees, these are considered public rather than private pension plans. Regardless of whether they are private or public, both types of pension plan function similarly and can offer substantial benefits. People who want to build retirement savings outside a pension sometimes use permanent life insurance with a cash value component, since the policy keeps accumulating value over time and can be drawn on later.