What is a pension defined as?

A pension is defined as a series of payments made to an individual after they retire from active employment. This form of retirement benefit is typically funded through contributions made by the employer, the employee, or both during the individual's working years. The purpose of a pension is to provide financial support to employees after they have reached retirement age, ensuring a stable income during their retirement years.

The defining characteristic of a pension as a series of payments highlights its role in providing ongoing financial security rather than a one-time payment. This distinguishes it from other retirement options, such as a single lump-sum payment, which does not ensure a consistent cash flow over time. Understanding these differences is crucial for employees and retirees when considering their financial planning and retirement strategies.