What is a pension? Defintion and examples
A pension is a monthly income people get after they retire. In most cases, employees and their employers contribute money to a fund every month while the person is actively employed. After retirement, the money is used as an income, which is typically paid out monthly. Some plans hand out all the money in one lump sum.
Pension schemes, a type of savings plan to help workers save money for when they reach the age of 60 or 65 (or older), exist in most countries. Compared to other forms of savings, there are special tax benefits for the contributor.
According to FT.com/lexicon, the Financial Times’ online dictionary, the term has the following meaning:
“An amount of money paid regularly by a government, company, or financial institution to someone who is officially considered to be too old or too ill to earn money by working.”
To dismiss from employment
We may use the term when a person is dismissed from employment. For example, somebody might say:
“John was pensioned off from the police force after the embarrassing incident.”
In many parts of Europe, North Africa, the Middle East, Latin America, Korea, the Philippines, and Japan, a pension is a boarding house or guest house.
They are similar to bed and breakfasts in the USA, Canada, UK, Ireland, and Australasia, but they offer lunch and supper as well as breakfast. In other words, pensions offer full board while bed and breakfasts only offer half board.
Wikipedia says the following about pension:
“These small businesses may offer special rates for travelers staying longer than a week, may be located in historic buildings, can be family-run, and are generally cheaper than other lodgings, such as hotels, although they offer more limited services.”
The rest of this article focuses on the term’s financial meaning.
Hundreds of millions of workers across the world put some money away each month for when they are older, i.e., when they reach the age of retirement. They save a percentage of their monthly income during their working life. When they reach the age of retirement, they use the money they built up, plus the interest it earned, to live on. How much they receive depends on two things:
- The total contributions.
- The fund’s interest rates while they contributed.
There are dozens of different kinds of pension plans. Some companies and other employers run their own schemes. If your employer does not have one, you can set up a private pension plan on your own.
Some plans give you a lump sum of (usually) tax-free cash on a specific date in the future, while others provide a monthly income.
In some countries, the government pays people a regular salary, i.e., a pension, when they retire. How much they receive depends on many factors, such as the number of dependants there are in the household, their contribution record, and how much they earned.
In the United Kingdom, for example, there are two main types:
- Basic State Pension – which can be up to £129.20 a week.
- New State Pension – which can be up to £168.60 a week.
In the UK, the state pension age on 6 October 2020 will be 66 years for both men and women.
In the United States, people call it a social security benefit rather than a state pension. How much people get depends on their contributions and lifetime earnings. People who did not contribute are not usually eligible, unless they had already been receiving social security benefits.
A higher percentage of Americans have a private pension plan, usually with employer’s contributions, than their counterparts in the UK.
Percentage of working wage
According to the World Economic Forum, pensioners in Croatia, Turkey, and the Netherlands receive pensions greater than their working wages just before they retired. Croatians’ state pensions are 129% of their working wage.
Britons on the other hand, get state pensions that are worth just 29% of their working wage.
Pensheni ni nini? Ufafanuzi na mifano Pensheni ni mapato ya kila mwezi watu kupata baada ya kustaafu. Katika visa vingi, wafanyakazi na waajiri wao huchangia pesa katika mfuko kila mwezi wakati mtu huyo anafanya kazi. Baada ya kustaafu, pesa hizo hutumiwa kama mapato, ambayo kwa kawaida hulipwa kila mwezi. Baadhi ya mipango hutoa pesa zote kwa kiasi kimoja. Mipango ya pensheni ni aina ya mpango wa akiba kusaidia wafanyakazi kuokoa pesa kwa wakati wao kufikia umri wa miaka 60 au 65 (au zaidi), zipo katika nchi nyingi. Ikilinganishwa na aina nyingine za akiba, kuna faida maalum za kodi kwa mchangiaji. "Kulingana na FT.com, kamusi ya mtandaoni ya Financial Times, neno hilo lina maana ifuatayo: ""Kiasi cha pesa kilicholipwa mara kwa mara na serikali, kampuni, au taasisi ya kifedha kwa mtu ambaye kwa rasmi huonwa kuwa mzee sana au mgonjwa sana kupata pesa kwa kufanya kazi.""" "Kwa mfano, mtu anaweza kusema: ""John alistaafu kutoka kwa jeshi la polisi baada ya tukio hilo lenye kuaibisha."" Katika sehemu nyingi za Ulaya, Afrika Kaskazini, Mashariki ya Kati, Amerika ya Latini, Korea, Ufilipino, na Japani, pensheni ni nyumba ya wageni au nyumba ya wageni." Kwa mfano, katika nchi za Ulaya, Canada, Uingereza, Ireland na Australia, nyumba za kulala na kiamsha kinywa hutumiwa kama chakula cha mchana na chakula cha jioni. Kwa maneno mengine, nyumba za kulala hutoa chakula kamili wakati nyumba za kulala na kiamsha kinywa hutoa nusu ya chakula. "Wikipedia inasema hivi kuhusu pensheni: ""Biashara hizi ndogo zinaweza kutoa viwango maalum kwa wasafiri wanaokaa kwa muda mrefu kuliko wiki moja, zinaweza kuwa katika majengo ya kihistoria, zinaweza kuendeshwa na familia, na kwa ujumla ni nafuu kuliko malazi mengine, kama vile hoteli, ingawa hutoa huduma ndogo zaidi.""" Zaidi ya milioni milioni za wafanyakazi duniani kote huweka pesa kando kila mwezi kwa ajili ya wakati wao ni wazee, yaani, wakati wao kufikia umri wa kustaafu. Wao huhifadhi asilimia ya mapato yao ya kila mwezi wakati wa maisha yao ya kazi. Wanapofikia umri wa kustaafu, wanatumia pesa walizozikusanya pamoja na riba zilizopatikana ili waishi. Kiasi wanachopokea hutegemea mambo mawili: - Jumla ya michango. - Fedha ya viwango vya riba wakati wao kuchangia. Kuna aina nyingi za mipango ya pensheni. Baadhi ya makampuni na waajiri wengine kuendesha mipango yao wenyewe. Kama mwajiri wako hana moja, unaweza kuanzisha binafsi ya pensheni mpango mwenyewe. Baadhi ya mipango hutoa kiasi cha fedha (kwa kawaida) bila kodi kwa tarehe fulani katika siku zijazo, wakati wengine hutoa mapato ya kila mwezi. Katika nchi fulani, serikali huwapa watu mshahara wa kawaida, yaani, pensheni, wanapostaafu. Kiasi cha malipo hutegemea mambo mengi kama vile idadi ya watu wanaotunzwa katika familia, rekodi ya michango, na kiasi cha mapato. Katika Uingereza, kwa mfano, kuna aina mbili kuu: - Basic State Pension <unk> ambayo inaweza kuwa hadi £ 129.20 kwa wiki. - New State Pension <unk> ambayo inaweza kuwa hadi £ 168.60 kwa wiki. Mwaka huu, umri wa kustaafu kwa serikali utakuwa miaka 66 kwa wanaume na wanawake. Huko Marekani, watu huita faida ya usalama wa kijamii badala ya pensheni ya serikali. Kiasi ambacho watu hupata kinategemea michango yao na mapato ya maisha. Watu ambao hawakuchangia kwa kawaida hawafai, isipokuwa kama tayari walikuwa wakipokea faida za usalama wa kijamii. Asilimia kubwa ya Wamarekani wana mpango wa pensheni binafsi, kwa kawaida na michango ya mwajiri, kuliko wenzao nchini Uingereza. Kwa mujibu wa World Economic Forum, watu walio na pensheni nchini Croatia, Uturuki na Uholanzi hupokea pensheni kubwa kuliko mshahara wao wa kazi kabla tu ya kustaafu. Pensheni za serikali za Wakroatia ni 129% ya mshahara wao wa kazi. Waingereza wana malipo ya pensheni ya serikali ambayo ni sawa na asilimia 29 ya mshahara wao.