What is the primary purpose of a pension?

The primary purpose of a pension is to provide a steady income stream to individuals, typically after they retire from their careers. This mechanism is designed to support individuals during their retirement years, ensuring that they have financial resources to live on when they are no longer earning a regular paycheck from employment. Pensions are often funded through contributions made by the employee, the employer, or both, which may be invested over time to grow until retirement.

This structured financial support is crucial because it aims to alleviate the risk of outliving one's savings and provides a sense of security for retirees, helping them maintain their standard of living after leaving the workforce. In contrast, the other options listed focus on different financial instruments or purposes: tax-deferred investments for professionals serve a different goal, education savings accounts target funding for children's schooling, and income loss insurance generally provides short-term financial protection rather than long-term retirement support.