Pension
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Pension
Pension (/pɛnʃən/; from Latin pensio, "payment") is a fixed sum paid regularly to a person, typically following retirement from service.
Etymology
The term pension comes from the Latin pensio, which means "payment". It was first used in the early 14th century to refer to payments made to soldiers for their service.
Types of Pensions
There are several types of pensions, including:
- Defined Benefit Pension Plan: A type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns.
- Defined Contribution Pension Plan: A type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the money in the account.
- State Pension: A pension provided by the government to individuals who have reached the state pension age. The amount received is based on the individual's National Insurance contributions.
Related Terms
- Retirement: The action or fact of leaving one's job and ceasing to work.
- Annuity: A fixed sum of money paid to someone each year, typically for the rest of their life.
- Superannuation: Regular payment made into a fund by an employee toward a future pension.
See Also
External links
- Medical encyclopedia article on Pension
- Wikipedia's article - Pension
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