pension

A regular payment (not wages) made to a person (or his/her family) after fulfilment of certain conditions of service; an organized retirement plan. Pension plans, which may be state-sponsored, occupational, or personal, vary widely in terms of contributions and provisions.

In the USA, the most significant provider of retirement income is the Social Security Administration, funded through non-voluntary contributions assessed on both employers and employees. Unions make employer contributions to pension plans an important element of their contract negotiations, and accumulated pension funds have become important sources of investment capital. Under federal tax regulations, individuals can deposit specified maximum amounts into personal retirement funds, have their income tax liability reduced by that amount as a deduction, and have taxes on the fund's interest deferred until they withdraw the money at or after retirement.