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Steps to Build Plan
  Step 1 - Define goal
  Step 2 - Gather data
  Step 3 - Get educated
  Step 4 - Assess situation
  Step 5 - Develop plan
  Step 6 - Make changes
  Step 7 - Get help
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Pension plans

A pension plan is a retirement plan, offered by some employers, that pays a set amount each year during retirement. Also called a defined-benefit plan, company pensions guarantee a specific amount of benefits to employees, calculated using a formula that typically includes your salary, years of service, and a fixed percentage rate. Most company pension plan benefits are paid out in the form of an annuity, a fixed monthly payment for the rest of your life. Depending on your company's pension plan rules, you may be eligible for a pension (at age 65) after a period of service (either 5 or 7 years) known as the vesting period.

Most pension plans are totally funded by the employer, but there are some that are based on required pre-tax contributions from the employee (limitd to a certain percentage per year) as well as additional funds provided by the employer.

Most pension plans are covered by the Pension Benefit Guaranty Corporation, or PBGC, a federal agency that protects employer-sponsored defined-benefit plans. Payments from these plans are insured by the PBGC up to a monthly maximum of $3,051.14 for a worker who retires at age 65. This maximum monthly amount that is protected is reduced if you begin receiving payments before age 65 or if your pension includes benefits for a survivor or other beneficiary.

Unlike some other retirement plans, pensions are not portable. When you leave your job, your pension benefits stay in the company-sponsored plan, where they can be claimed at age 65. Some pension plans allow you to begin collecting pension benefits before the traditional retirement age of 65. However, like Social Security, your benefit may be reduced because you will be receiving benefits over a longer period of time.

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