In most cases people are confused on the source of investment they should have faith upon after retirement. Most of us opt for pension plans in order to remain in the safer side of finance management. Pension plan can be generally of two types. The first type is the pension plan which is sponsored by the employer and the second one is a non sponsored pension plan. Both the pension plans have their own advantages and disadvantages.

It is up to the individual to decide whether an employee sponsored pension plan is enough for the living expenses or the individual wants to invest separately in non sponsored pension plans or not. Generally the decision can be made based on the returns the individual is supposed to receive on retiring. It is not necessary that the employee has to remain with the company till the end in order to get the pension benefits after retirement.

In case of employer sponsored pension plans the major advantage that the individual gets is the contribution of the company towards the fund. Many organizations believe in 1:1 investment ratio for the pension plans of its employees. For example, if the employee is giving a certain amount of money from his or her salary towards the pension fund, then the same amount of money is investment by the company too. 

Thus, the burden of investment is shared by the employee and the employer. Another major advantage of sponsored investment pension plan is that the fund is liable to get tax benefits from the government. A big sum of the money which the employee pays to the government itself is returned to the employee, by the government, in form of pension fund. Thus a lot of money that the employee has earned in his or her lifetime is saved from going into the government treasury.