A pension plan is an employer's program for providing retirement income to eligible employees. Employers are not required to provide a pension plan, but if they do, the plan must meet certain requirements. Plans sponsored by these entities are regulated by the Internal Revenue Code.
Plans sponsored by state and local government are also subject to state law.
If you work for a private employer that offers a retirement plan, you must be provided with a summary of the plan that describes, in clear, non-legal terms, the substantive provisions of the plan. In a defined benefit plan, the plan specifies how much in benefits the plan will pay out to a retiree. The defined benefit usually is calculated using a formula based on a percentage of your final compensation multiplied by the number of years you work for your employer. With this type of plan, you should be able to estimate from the start of your employment what your ultimate pension benefit will be. Your employer is required to fund a defined benefit plan adequately so it will provide the promised benefits when you and other employees retire.