Pensions are a form of income that individuals receive after they retire. They are a way to ensure financial security during one’s retirement years. However, not all pensions are created equal, and it’s important to understand the different types of pensions available.

The three most common types of pensions are defined benefit, defined contribution, and cash balance plans. Defined benefit plans typically provide a specific amount of income to an employee upon retirement, based on factors such as years of service and salary. Defined contribution plans allow employees to contribute a portion of their salary to a retirement account, which is then invested and the amount received upon retirement will depend on the performance of the investments. Cash balance plans combine features of both defined benefit and defined contribution plans, providing a guaranteed amount of income while also allowing employees to contribute to their retirement accounts. It’s important for individuals to carefully research and consider which type of pension will best fit their needs and financial goals in retirement.