What it is
A pension is a fixed amount of money paid by an employer or the government to an individual upon retirement.
It is typically drawn from a pension fund that is made up of contributions from both the employee and employer throughout years of employment.
What it means for you
Retirement planning involves making sure you have 1 or more alternative income sources, including pension programs, that can cover your needs when you’re no longer working.
Pension income is usually calculated based on an employee’s earnings, length of service, and the terms of the employer- or government-run pension fund. It can be paid out monthly or as a lump sum when you retire.
When planning for retirement, estimate whether your pension income is enough to help achieve your desired retirement lifestyle.
You may have the option to increase your contributions to boost your pension. Another way to grow your retirement fund is to supplement statutory benefits by doing long-term investing.
