Business / Taxes / Pension: A pension is an employer plan that’s designed to provide retirement income to employees who have vested — or worked enough years to qualify for the income. These defined benefit plans promise a fixed income, usually paid for the employee’s lifetime or the combined lifetimes of the employee and his or her spouse. The employer contributes to the plan, invests the assets, and pays out the benefit, which is typically based on a formula that includes final salary and years on the job. You pay federal income tax on your pension at your regular rate, so a percentage is withheld from each check. If the state where you live taxes income, those taxes are withheld too. However, you’re not subject to Social Security or Medicare withholding on pension income. In contrast, the retirement income you receive from a defined contribution plan depends on the amounts that were added to the plan, the way the assets were invested, and their investment performance. The way a particular plan is structured determines if you, your employer, or both you and your employer contribute and what the ceiling on that contribution is.

Other Words for Pension

Pension Noun Synonyms: benefit, allowance, annuity, subsistence, superannuation, allotment, old-age pension, social security, golden handshake

Advance Funded Pension Plan

Business / Finance / Advance Funded Pension Plan: A pension plan in which funds are set aside in advance of the date of retirement. MORE

Mucous-Bag Suspension Feeder

Science / Marine Biology / Mucous-Bag Suspension Feeder: Suspension feeder employing a sheet or bag of mucus to trap particles nonselectively MORE

Tentacle-Tube-Foot Suspension Feeder

Science / Marine Biology / Tentacle-Tube-Foot Suspension Feeder: Suspension feeder that traps particles on distinct tentacles or tube feet (in echinoderms) MORE