Editing Pension (section)

==Effects==
===Risk and responsibility===
The benefits of defined benefit and defined contribution plans differ based on the degree of financial security provided to the retiree. With defined benefit plans, retirees receive a guaranteed payout at retirement, determined by a fixed formula based on factors such as salary and years of service.<ref>{{Cite web |title=Employee Retirement Income Security Act (ERISA) |url=http://www.dol.gov/general/topic/retirement/erisa |access-date=2023-04-28 |website=DOL |language=en}}</ref> The risk and responsibility of ensuring sufficient funding through retirement is borne by the employer or plan managers. This type of plan provides a level of financial security for retirees, ensuring they will receive a specific amount of income throughout their retirement years. However this income is not usually guaranteed to keep up with inflation, so its purchasing power may decline over the years.

On the other hand, defined contribution plans are dependent upon the amount of money contributed and the performance of the investment vehicles used.<ref>{{Cite web |title=Defined-Benefit vs. Defined-Contribution Plans Explained |url=https://www.investopedia.com/ask/answers/032415/how-does-defined-benefit-pension-plan-differ-defined-contribution-plan.asp |access-date=2023-04-28 |website=Investopedia |language=en}}</ref> Employees are responsible for ensuring that their contributions are sufficient to provide for their retirement needs, and they face the risk of market fluctuations that could reduce their retirement savings. However, defined contribution plans provide more flexibility for employees, who can choose how much to contribute and how to invest their funds.

Hybrid plans, such as cash balance and pension equity plans, combine features of both defined benefit and defined contribution plans. These plans have become increasingly popular in the U.S. since the 1990s. Cash balance plans, for example, provide a guaranteed benefit like a defined benefit plan, but the benefit is expressed as an account balance, like a defined contribution plan. Pension equity plans are a type of cash balance plan that credits employee accounts with a percentage of their pay each year, similar to a defined contribution plan.{{Citation needed|date=March 2024}}

===Incentives for parental investment===
Pay-as-you-go pensions can [[Incentive#Misaligned incentives|misalign incentives]] between [[parental investment]] and [[elderly care]].<ref name="q893">{{cite journal | last=Sinn | first=Hans-Werner | title=The pay-as-you-go pension system as fertility insurance and an enforcement device | journal=Journal of Public Economics | volume=88 | issue=7-8 | date=2004 | doi=10.1016/S0047-2727(03)00015-X | doi-access=free | pages=1335–1357 | url=https://epub.ub.uni-muenchen.de/938/1/sinn-pay-as-you-go-system-fertility.pdf | access-date=10 May 2025}}</ref><ref name="l812">{{cite journal | last=Cigno | first=Alessandro | title=Children and pensions | journal=Journal of Population Economics | volume=5 | issue=3 | date=1 August 1992 | issn=1432-1475 | doi=10.1007/BF00172091 | pages=175–183 | url=https://link.springer.com/article/10.1007/BF00172091 | access-date=11 April 2025}}</ref> According to the [[old-age-security hypothesis]], the [[elderly care]] by the [[child]] generation can offset the [[cost of raising a child]].<ref name="cigno07">{{Cite book|last1=Cigno|first1=Alessandro|url=https://books.google.com/books?id=TgBRYo-7tD0C|title=Children and Pensions|last2=Werding|first2=Martin|date=2007|publisher=MIT Press|isbn=978-0-262-03369-5|language=en}}</ref>

=== Gender pension gap ===
The gender pension gap, the difference between genders in average pensions, varies by country. In OECD countries the gender pension gap varied from 3% in Estonia to 47% in Japan according to data between 2013 and 2018.<ref>{{Cite book |last=OCDE |date=2021 |title=Towards Improved Retirement Savings Outcomes for Women |chapter=Chaper 1: Assessing the gender gap in retirement saving arrangements |chapter-url=https://www.oecd-ilibrary.org/sites/f7b48808-en/1/3/1/index.html?itemId=/content/publication/f7b48808-en&_csp_=4c6990cb7cb9191a176361e0f07511b4&itemIGO=oecd&itemContentType=book |publisher=OCDE Publishing}}</ref> Eastern European countries tend to have a smaller pension gender gap due to less pronounced gender differences in [[part-time job]]s.<ref>{{Cite book |last1=Samek Lodovici |first1=Manuela |title=The gender pension gap: differences between mothers and women without children |last2=Drufuca |first2=Serena |last3=Patrizio |first3=Monica |last4=Pesce |first4=Flavia |publisher=Policy Department of the European Parliament's Committee on Women’s Rights and Gender Equality. |year=2016 |pages=28–32}}</ref> Possible contributions to the pension gender gap include [[gender pay gap]]s, differences in employment rates, [[parental leave]], [[unpaid care work]] and [[gender role]]s.<ref>{{Cite journal |last1=Frericks |first1=Patricia |last2=Maier |first2=Robert L. |last3=De Graaf |first3=Willibrord |date=2007 |title=European Pension Reforms: Individualization, Privatization and Gender Pension Gaps |journal=Social Politics |volume=14 |issue=2 |pages=212–237 |doi=10.1093/sp/jxm008 |ssrn=1447686|doi-access=free }}</ref><ref>{{Cite journal |last1=Frericks |first1=P. |last2=Maier |first2=R. |last3=De Graaf |first3=W. |date=October 2006 |title=Shifting the Pension Mix: Consequences for Dutch and Danish Women |doi=10.1111/j.1467-9515.2006.00500.x |journal=Social Policy and Administration |volume=40 |issue=5 |pages=475–492|doi-access=free }}</ref><ref>{{Cite book |last=OCDE |title=Towards Improved Retirement Savings Outcomes for Women |publisher=OCDE Publishing |year=2021 |chapter=Chapter 2: Understanding the gender pension gap beyond labour market drivers through a literature review}}</ref> 

===Years in retirement===
There is a gender gap in expected years in retirement with 22.8 years for women and 18.4 years for men on average ([[OECD]], 2022), contributed by [[Life expectancy#Sex differences|sex differences in life expectancy]].<ref name="p857">{{cite | title=Society at a Glance 2024: OECD Social Indicators, Expected years after labour market exit | publisher=OECD | date=20 June 2024  | doi=10.1787/bb2c49e5-en | doi-access=free | page=}}</ref> The difference in years in retirement contribute to gender-differentiated pension rates.<ref>{{Cite web |title=The gender pay gap situation in the EU |url=https://commission.europa.eu/strategy-and-policy/policies/justice-and-fundamental-rights/gender-equality/equal-pay/gender-pay-gap-situation-eu_en |access-date=2023-04-28 |website=commission.europa.eu |language=en}}</ref>