Pension Plan

What Does Pension Plan Mean?

A pension plan is a financial strategy for retirement in which both the employee and employer contribute to an account that grows over time, providing a fixed income upon retirement. In the context of insurance, the benefits offered by pension plans are often insured by insurance companies.

Insuranceopedia Explains Pension Plan

It is also common for pension plans to be managed by insurance companies on behalf of employers or converted into annuities. These annuities can provide a fixed income upon retirement for the plan’s owner. The way an annuity turns savings into income depends on the type chosen, and the basics of how annuities work apply whether the money came from a pension or from a 401(k) rollover. Pension plan benefits are typically paid out in regular intervals, such as monthly. Many pension plans feature a matching component, where the employer matches the employee’s contributions to the plan, helping to grow its cash value.

Pension income on its own often doesn’t cover every retirement expense, so retirees frequently look at additional coverage like a senior life policy. The best life insurance companies for seniors differ a lot in price and approval requirements, especially for applicants over 70.