In general, a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income.
The term retirement plan refers to a pension granted upon retirement. Retirement plans may be set up by employers, insurance companies, the government or other institutions.
A pension created by an employer for the benefit of an employee is commonly referred to as an employer pension.The government or other organizations also fund pensions. Many pensions also contain an additional insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries.
The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal and/or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree.