The Differences Between A Pension And Social Security

There are very significant differences between Social Security and a pension. Although there are Social Security programs that look as if they are a pension, they are not and no part of it is administered like a traditional pension plan. Pensions are quite simple to understand, they are an amount of money that is provided to people upon their retirement who have paid into the plan or have been given a pension plan by their employer. Social Security in Bedford, PA on the other hand is an insurance program that is administered by the government; it provides a number of services, only one of which pays taxpayer funded benefits to those who retire. It is this part of Social Security that is often confusing as many people call these benefits a Social Security pension which they are not.

There are a number of ways to fund a pension. People can pay directly into a plan as employees, they can have a private pension plan that they pay into, pensions may also be a benefit that is given to the employees by their employer; pensions may also be funded by a union or even the government. The funds are either banked against the beneficiary’s eventual retirement or they can be paid out on demand; the plans details are what determine the payout procedures.

On the other hand the United States Social Security Administration provides a host of benefits to people with disabilities, retired folks as well as the survivors of people who have died. Of course there is a criterion that must be met for all of these benefits which include such things as health benefits, unemployment benefits as well as short term assistance to those in dire need. It is these benefits that lead to many people seeing Social Security as a pension but the truth is; Social Security is a form of insurance. The money that is needed to fund all these benefits come from paying Federal Insurance Contributions, known s FICA, these contributions is a tax. Based on the amount of tax paid, the contributors can look forward to benefits either when disabled or later in life.

Most people have both, personal pension plans as well as Social Security insurance. The reason is quite simple, Social Security benefits are low and without a private pension plan to fall back on many people would find it difficult to live a rewarding life.

Social security in Bedford, PA can be comforting in time of need. In the event of a medical disability it is nice to know that there are certain benefits available, the same is true for those about to retire. For complete information on Social Security benefits click here.

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