A pension is a retirement arrangement in which your employer promises you a regular payment from the day you retire, for as long as you live. The amount of your pension usually depends on how long you worked for an employer and your salary with that employer. A pension plan is an employee benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides retirement income or defers income until termination of covered employment or beyond. A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension.The decline in union membership and the changing work environment pretty much led to pensions no longer being very common. IRA´s and 401(k)s have become more popular and essentially replaced pensions. Over the years, private companies gradually shifted from pensions to 401(k)s, which are generally cheaper and entail far fewer risks for the company.
