What Type Of Retirement Plan Is A Pension? 
A pension is a retirement plan that is driven by the benefit it will pay to participants in the plan . This is known as a defined benefit plan . What this means is , each member of the pension is entitled to a benefit that is calculated based on a chosen number of factors pertinent to that individual . For most plans such variables include salary and time of service . The alternative to a defined benefit plan is a defined contribution plan , where no explicit benefit is made or guaranteed , and instead the plan is defined by the contributions that are made either by the participant -LRB- employee -RRB- or the participant 's employer . 