Pension
In short
A fund or scheme where money is paid in during a person's working life to provide regular income after they retire.
In plain words
You save money while you are working. When you stop working due to age, you receive regular payments from that saved money to live on.
A simple example
A worker pays £200 every month into a retirement fund for thirty years. Once they retire, the fund pays them a monthly amount to cover their bills.
Why it matters
It ensures people can afford food, housing, and healthcare when they no longer have a monthly salary. It prevents poverty in old age.
Easy to mix up
Do not confuse a pension with a standard savings account, which you can usually withdraw all at once at any time.