A pension is a fixed sum of money paid regularly to a retiree. A pension plan is funded by the employee, employer or both. For plans that require employee contributions, money is invested and then used to purchase an annuity, which provides a set income.Know More
The number of companies offering a pension plan to new employees declined from 60 percent of Fortune 500 companies in 1998 to just 24 percent by the end of 2013. As of 2013, only 7 percent of Fortune 500 companies offered traditional pension plans.
Traditional pension plans typically use a formula to determine the amount of money the retiree receives. This formula is a percentage multiplied by the number of years of service and factoring in the employee's ending salary. The formula varies, but as of 2014, Exxon Mobile offers 1.6 percent times the pension service years times the average last pensionable pay less Social Security deductions. Lockheed Martin, United Parcel Service, Johnson and Johnson, 3M, Bank of America, Wachovia, Coca Cola, Accenture, and Liden Nestle Soled & Associates are companies that still offer a defined benefit, or pension plan, as of 2013. In Nestle's plan, if the employer contributes $200 per month for 30 years, the employee receives $6,000 per month for the rest of his life.Learn more about Financial Planning
There is no minimum number of years a citizen must work to collect benefits under the Canada Pension Plan. To collect a pension, Canadians must have worked at some point during their adult lives and made at least one contribution to the system.Full Answer >
A deferred vested pension is in place when a person worked for an employer long enough to earn benefits in a pension plan. The employee then left the company before receiving the benefits, according to the Pension Benefit Guaranty Corporation.Full Answer >
A widow or widower who's deceased spouse received social security income is eligible for a widow's pension when she reaches age 60. The survivor receives this benefit at any age if she cares for an heir of the deceased who is under 16 or disabled, according to AARP.Full Answer >
Deferred compensation, or the deferring of taxes on income until it’s withdrawn, can refer to pensions, stock options and retirement plans. Qualifying plans that allow for deferral of taxes must comply with the Employee Retirement Income Security Act of 1974. Other types of deferred compensation are typically taxed when earned.Full Answer >