Pension - Financing

Financing

There are various ways in which a pension may be financed.

Defined contribution pensions, by definition, are funded, as the "guarantee" made to employees is that specified (defined) contributions will be made during an individual's working life.

There are many ways to finance your pension and save for retirement. Pension plans can be set up by your employer, matching your contribution each month, by the state or personally through a pension scheme with a financial institution, such as a bank or brokerage firm. Pension plans often come with a tax break depending on the country and plan type.

For example Canadians have the option to open a Registered Retirement Savings Plan (RRSP), as well as a range of employee and state pension programs. This plan allows contributions to this account to be marked as un-taxable income and remain un-taxed until withdrawal. Most country’s governments will provide advice on pension schemes.