Editing Pension fund (section)

==How they work ==
It is important to distinguish between pension plan, funds and firm. A pension plan is a benefits program set up and sustained by an employer or an employee group. They are managed by state or private firms as well as pension funds.<ref>{{Cite book |url=https://www.worldcat.org/title/785080462 |title=Handbook of key global financial markets, institutions and infrastructure |date=2013 |publisher=Elsevier |isbn=978-0-12-397873-8 |editor-last=Caprio |editor-first=Gerard |edition=1st |location=Boston |oclc=785080462 |editor-last2=Arner |editor-first2=Douglas W. |editor-last3=Beck |editor-first3=Thorsten |editor-last4=Calomiris |editor-first4=Charles W. |editor-last5=Neal |editor-first5=Larry |editor-last6=Véron |editor-first6=Nicolas}}</ref>  Pension funds are financial mechanisms that provide retirement income for employees after their working life. They work by accumulating contributions from employers, and sometimes employees, which are then invested to grow over time. Upon retirement, employees receive benefits, typically calculated as a percentage of their average salary during their working years. For instance, consider a scenario where a pension scheme offers a payment equivalent to 1% of an individual's average salary over the last five years of their employment for each year they served with the employer. Thus, if an employee worked for 35 years at the company and had an average final salary of $60,000, they would be entitled to an annual pension of $21,000. It is important to point out that one cannot usually take early withdrawals or loans from pensions. Public sector pensions, like the California Public Employees’ Retirement System (CalPERS), often include cost-of-living escalators and can be more generous than private sector pensions. Private pension plans are regulated by federal laws such as the Employee Retirement Income Security Act (ERISA) and are insured by the Pension Benefit Guaranty Corporation (PBGC), which guarantees benefits if a pension plan fails.<ref>{{Cite web |title=How Do Pension Funds Work? |url=https://www.investopedia.com/articles/investing-strategy/090916/how-do-pension-funds-work.asp |access-date=2024-04-28 |website=Investopedia |language=en}}</ref>