Explore commonly used personal finance terms.
An annual pension benefit is the yearly amount a retiree receives from a pension plan. It is calculated based on factors like years of service, final salary, and the plan’s benefit formula. Defined benefit plans, often sponsored by employers, provide a guaranteed annual pension. This benefit is essential for retirement planning, ensuring a steady income after retirement, with the option of cost-of-living adjustments or survivor benefits. Properly understanding one’s pension ensures a smoother transition into retirement.
