The terms retirement plan or superannuation refer to a pension granted upon retirement. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade union called as retirement plans or pension schemes. Retirement pensions are typically in the form of a guaranteed annuity.
A pension created by an employer for the benefit of an employee is generally referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, generally advantageous to employee and employer for tax reasons. Many pensions also contain an insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries, while annuity income insures against the risk of longevity. Other vehicles (certain lottery payouts, for example, or an annuity) may provide a similar stream of payments.
The common use of the term pension is to describe the payments a person receives upon retirement, generally under pre-determined legal and/or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree.