Early private pension plans tended to be what are called “defined-benefit” plans, so named because the promises made to workers are about the payments, or benefits, they will receive when they retire. In such plans, participants are usually entitled to a lifetime payment stream that starts when they retire. In a typical private plan, a worker is entitled to receive a benefit that is a proportion of the salary paid over the last few years of work, the proportion depending on years of service.
