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Pensions offer greater stability than 401(k) plans. With your pension, you are guaranteed a fixed monthly payment every month when you retire. Because it's a fixed amount, you'll be able to budget based on steady payments from your pension and Social Security benefits. A 401(k) is less stable.

As like other pension schemes, a personal pension offers a tax-efficient way to save for retirement. The money paid into a personal pension scheme is invested to build up a pot of money for when you retire. You get tax relief on the contributions.

As of March 2022, 69 percent of private industry workers had access to retirement benefits (either defined benefit or defined contribution plans), while 92 percent of state and local government workers had access.

A 401(k) is an employer-sponsored retirement account that allows an employee to divert a percentage of his or her salary?either pre- or post-tax?to the account. A traditional pension plan offers retirees a fixed monthly benefit for the rest of their lives.

The Employee Retirement Income Security Act (ERISA) covers two types of retirement plans: defined benefit plans and defined contribution plans. A defined benefit plan promises a specified monthly benefit at retirement.

Among working-age individuals (ages 15 to 64), the most common type of retirement accounts in 2020 were 401(k)-style accounts (34.6%). About 18% of working-age individuals had an IRA or Keogh account, and 13.5% had a defined-benefit or cash balance plan.

A pension is a retirement-savings plan, typically employer-funded, that gives you regular payments in retirement. A 401(k) is a workplace retirement plan that gives employees a tax break when they contribute. Tina Orem is an editor at NerdWallet.

A private pension is a plan into which individuals contribute from their earnings, which then will pay them a private pension after retirement. It is an alternative to the state pension. Usually, individuals invest funds into saving schemes or mutual funds, run by insurance companies.