In today’s lesson, we will look at an area of the economy that is very, very important, no matter what country you live in. The topic of today’s podcast is pensions.
Let’s start by looking at some basic vocabulary.
- Retire: to leave your job and to stop working, usually by reaching the legal age for leaving employment. Maybe 60-years old, or 65. The person who retires is known as a retiree.
- Pension: A pension is a regular payment––usually from a company you worked for or from the government––that you receive after you retire. The person who receives the pension is known as a pensioner.
- Employer: a person or organization that employs people, in other words, this is the one that gives the employee payment in exchange for their work.
- Disability: A disability is any medical condition that makes it more difficult for a person to do certain activities, like work, for example.
- Trade Union: an organized association of workers formed to protect and further their rights and interests. Also known as a labor union or a syndicate.
Okay, let’s go to our dialogue to hear these words used in context.
Retirement plans may be set up by employers, insurance companies, the government, or other institutions such as employer associations or trade unions. The quality of pension systems available to workers varies greatly across the globe.
Probably the most common is the so-called “state pension”. This is paid to pensioners by governments that are committed to providing social security to their citizens. Workers receive state pensions when they reach the age of retirement, or if they become disabled and can no longer work. Normally, the citizen has contributed with payments during their working life to qualify for this benefit. Those are “state pensions”.
Another common form of pensions is the so-called “employment-based pensions”. Employment-based pensions are retirement plans that usually require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. Those are “employment-based pensions”.
The employment-based pension can be based on a so-called “Defined Contribution Plan”. This is a pension plan where employers set aside a certain proportion of a worker's earnings in an investment account, and the worker receives this savings and the investment earnings when they retire. A defined-contribution plan.
Okay friends, let’s take one more look at today’s vocabulary:
- Retire: to leave your job and to stop working, usually by reaching the legal age for leaving employment. The person who retires is known as a retiree.
- Pension: a regular payment that you receive after you retire.
- Employer: a person or organization that employs people.
- Disability: A medical condition that makes it more difficult for a person to do certain activities, like work.
- Trade Union: an organized association of workers to protect their rights and interests.
We’ll have a lesson on trade unions later on.
That is all for today. If you have any suggestions or comments––or if you are interested in our courses––I would very much enjoy hearing from you.
Featured image credit: Shashank Thapa on Unsplash