What Is a Pension?
A pension is a retirement plan that can provide regular income after you stop working.
Traditional pensions, also called defined benefit plans, generally calculate retirement income using factors such as salary history, years of service and plan formulas.
Depending on the plan, payments may continue for life and may include survivor benefit options for a spouse or beneficiary.
Why Consider Pension Income?
Explore Pension Options
Compare Common Pension Options
| Feature | Single Life | Joint & Survivor | Lump Sum |
| Payment Type | Monthly Income | Monthly Income | One-time payment |
| Lifetime Income | Yes | Yes | No automatic guarantee |
| Survivor Protection | Usually no | Yes | Depends on management |
| Investment Responsibility | Plan | Plan | Individual |
| Common Use | Maximum personal income | Spouse protection | Flexibility and control |
Pension Benefits and Payouts
Pension income can vary based on the plan formula, retirement age, years of service and payout option selected.
Your pension amount may depend on factors such as:
- Years of service
- Salary history
- Retirement age
- Pension formula
- Survivor option
- Early retirement reductions
- Cost-of-living adjustments
- Plan rules
2026 Pension Plan Limits
Review key 2026 IRS limits for defined benefit and defined contribution retirement plans, including the maximum annual pension benefit and compensation limits.
| 2026 Pension / Retirement Plan Limit | Amount |
|---|---|
| Defined Benefit Plan Annual Benefit Limit | $290,000 |
| Defined Contribution Plan Limit | $72,000 |
| Annual Compensation Limit | $360,000 |
| Highly Compensated Employee Threshold | $160,000 |
| Key Employee Threshold | $235,000 |
Data year:
2026
Update frequency:
Annually
Source:
Internal Revenue Service (IRS)
—
View official IRS retirement plan limits
Pension and retirement-plan limits can change annually. Actual benefits and contributions depend on the plan terms, compensation and applicable IRS rules.
Defined Benefit vs. Defined Contribution Plans
Compare the two main types of employer retirement plans. Defined benefit plans generally promise a formula-based retirement benefit, while defined contribution plans depend on contributions and investment performance.
| Feature | Defined Benefit Plan | Defined Contribution Plan |
|---|---|---|
| How Benefits Are Determined | Usually based on a formula using salary, years of service and plan rules | Based on contributions, investment returns and account performance |
| Who Bears Investment Risk | Generally the employer or plan sponsor | Generally the participant |
| Employee Account Balance | Usually no individual investment account balance | Individual account balance |
| Employer Contributions | Employer funds the promised benefit under plan rules | Employer contributions may include matching or nonelective contributions |
| Employee Contributions | May or may not be required depending on the plan | Often allowed through payroll contributions |
| Retirement Income | Often paid as a monthly lifetime benefit, with other payout options possible | Depends on accumulated account value and chosen withdrawal method |
| Portability | Benefits may remain with the plan or be eligible for certain rollover options | Account balances are generally more portable when changing employers |
Source: U.S. Department of Labor — View retirement plan information
Retirement plan features vary by employer and plan document. This table provides a general comparison and does not describe every possible pension or defined contribution plan.
2026 PBGC Maximum Guaranteed Pension Benefits
The Pension Benefit Guaranty Corporation (PBGC) sets annual maximum guarantee amounts for certain terminated single-employer pension plans. The amount varies by age and payment form.
| Age | Straight-Life Annuity | Joint & 50% Survivor Annuity |
|---|---|---|
| 55 | $3,505.40 / month | $3,154.86 / month |
| 60 | $5,063.35 / month | $4,557.02 / month |
| 62 | $6,153.92 / month | $5,538.53 / month |
| 65 | $7,789.77 / month | $7,010.79 / month |
| 67 | $9,425.62 / month | $8,483.06 / month |
| 70 | $12,931.02 / month | $11,637.92 / month |
| 75 | $23,680.90 / month | $21,312.81 / month |
Data year:
2026
Update frequency:
Annually
Applies to:
Certain PBGC-trusteed single-employer pension plans
Source:
Pension Benefit Guaranty Corporation (PBGC)
—
View official PBGC guarantee tables
These amounts are maximum legal guarantees, not guaranteed payments for every participant. Actual PBGC benefits depend on the plan, participant age, benefit form and other federal guarantee rules. Joint-and-50%-survivor figures shown assume both spouses are the same age.
What Can Affect Pension Income?
Who May Consider Pension Income Planning?
Benefits and Things to Consider
Pensions vs. Other Retirement Income
Common Pension Questions
Related Retirement Option
Ready to Explore Pension Options?
Compare payout choices, survivor benefits and retirement timing to better understand how your pension can fit into your retirement plan.