Pension Plan
Accounting glossary · Understand, connect, apply
A pension plan is an arrangement providing retirement benefits, commonly classified as defined contribution or defined benefit according to the substance of the obligations.
Example
An employer may promise fixed contributions to a retirement account or a benefit determined by a service-based formula.
Remember the difference
The accounting differs significantly between plan types. A pension contribution is not automatically the same as pension expense.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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