Glossary
Pension
A pension is a retirement arrangement in which an employer or public system pays a former employee a defined income, usually monthly and for life, based on their salary and years of service.
Pensions are defined benefit plans: the payer bears the investment and longevity risk, and the retiree receives a formula-driven benefit regardless of markets. Once dominant, they now survive mainly in government employment and a shrinking set of private employers and unions.
Why it matters in practice
A pension is guaranteed lifetime income — the exact thing retirees otherwise struggle to build — so decisions that affect it deserve unusual care: survivor benefit elections, retirement timing, and any lump-sum buyout offer, most of which are irrevocable once made. Coordination questions follow: how the pension interacts with Social Security, and how much investment risk the rest of the portfolio still needs to take.
In California
Most public workers in California are covered by CalPERS, CalSTRS, or county systems such as LACERA and OCERS, each with its own formulas and election rules.
Related terms: Defined Benefit Plan · CalPERS · CalSTRS · Lump Sum · Annuity