A pension system is a financial arrangement designed to provide individuals with income after they retire from work. It typically involves contributions made during a person's working life, which are then invested to grow over time. When the individual retires, they receive regular payments, ensuring financial stability in their later years. There are various types of pension systems, including defined benefit plans, where the payout is predetermined based on salary and years of service, and defined contribution plans, where the payout depends on the amount contributed and investment performance. These systems are crucial for supporting retirees and promoting economic security.