A pension provides regular income payments that you would receive for the rest of your life when you stop working--typically when people retire. A pension plan is a large pool of savings grows over time through contributions from workers or plan participants and their employer or plan sponsor. The plan assets are managed by professional investment managers, and most of the risks (such as investment risk) associated with managing plan assets will be assumed by the plan sponsor rather than plan participants. Particulars will vary from plan-to-plan. For example, there are variables such as how the money or contributions are set aside, who makes contributions, how the income is generated, when payments are made, the types of payments that are made, and how long pension payments last. The basic idea is that the longer you work the higher the payout. There may be tax breaks for pension contributions and there are limits on how much can go into a plan. Many pensions are payable to a surviving spouse on the death of the policyholder, and some pension payments are inflation-adjusted. The term pension is most often associated with defined benefit pension plans that provide regular, annuity-like payments to retirees. This is in contrast to defined contribution plans such as the 401k that shift most responsibilities onto employees and do not provide guaranteed lifetime income.

Anna Rappaport on Annuities and Planning for the Long Term

Anna Rappaport is widely recognized as a leading expert on retirement systems, workforce issues, the impact of changing demographics and women’s...

Would it be advisable to switch from my annuity to another type of investment?

It's difficult to provide an in depth response without having some more detail on the type of


BC Public Pension Plan Database

The Center for Retirement Research at Boston College maintains an interesting data set for public defined benefit pension plans.

The Public Plans Database offers data on 126 state and local defined benefit pension plans.

The data covers 90 percent of all state government pension plans, and 20 percent of local plans.  In all, the database covers 85 percent of all public pension plan assets and members.

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New Deferred Income Annuity from NY Life

News on a recent deferred income annuity product release from New York Life:


Discounting Pension Liabilities with the Risk Free Rate

An interesting research brief from the Center for Retirement Research at Boston College discusses certain aspects of the present state state-run pension plans.

More specifically, this brief addresses locally administered pension plans.

An eye-opening statistic reveals that half of these pension plans would be considered unfunded if they discounted the value of their liabilities using the risk free rate.

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