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A pension is the actual deferred payout of a retirement plan.  Usually a pension plan is paid out after an employee has retired.  But often enough a pension may be given to the spouse or children of a deceased worker.  Under the Employee Retirement Income Security Act (ERISA) an employee has legal rights to receive their pension benefits prior to retirement after the employee ceases work.  This is possible through vesting.  Prior to the act employees who worked and contributed to pension plans for several years were unable to receive their pension benefits when their employment was terminated.  Pension plans can be sponsored by employers, government agencies, and labor unions. 

Private sector pension plans are invested by managers and trustees of a business entity.  ERISA has established rules to govern the way that these funds are to be invested and require detailed investment reporting.  These rules and regulations protect the benefits from being improperly used.