What is a pension plan?

Accounting Dec 18, 2020

Expert Solution

A pension plan is a pool of money set aside by an employer that is invested on behalf of the employees to pay for their retirement. Some pension plans are defined benefit plans meaning that they pay a preset amount each year to retirees. Others are defined contribution plan where employers contribute an amount that can be increased and matched by employees to an annuity that will pay out when they reach retirement.

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