How is a pension plan structured?

A pension plan is primarily structured around the idea that employers are responsible for making contributions to a fund that will provide future benefits to employees. This structure allows employers to manage the investment risks and the responsibility of ensuring that there are sufficient funds to pay out benefits in retirement.

Employees typically do not make contributions in the early stages of their employment, especially in defined benefit plans, where the employer promises a specific retirement benefit based on factors like salary and years of service. This setup helps employees feel secure as they do not have to worry about funding their own pensions, which is a burden placed entirely on the employer's shoulders.

In contrast, other options suggest mechanisms like employee contributions or individual savings accounts, which do not accurately capture the essence of traditional pension plans. Therefore, the correct answer highlights the employer's role in funding the pension, which is critical to understanding how these plans are designed to support employees in retirement.