defined contribution pension

A defined contribution pension is a retirement savings plan where you and your employer contribute a set amount or percentage of your salary into an investment account. Over time, these contributions grow based on investment performance. When you retire, the money accumulated is used to provide your pension income. The key point is that your future pension depends on how much has been saved and how well investments perform, rather than a guaranteed fixed payout. It offers flexibility and potential for growth but also carries investment risk.