What is the purpose of a disability pension?

A disability pension is specifically designed to provide income to individuals who are unable to work due to a qualifying disability. This financial support is typically administered through an employer-funded plan, which compensates employees who have contributed to such a plan and who are now facing challenges due to their health condition. The nature of a disability pension is to replace a portion of the income that would have been generated through employment, addressing the economic impact of being unable to work.

While retirement savings, health insurance, and unemployment benefits are important components of financial security, they serve different purposes. Retirement savings are meant for funding expenses in later life after one has ceased working, health insurance typically covers medical expenses rather than providing direct income support, and unemployment benefits assist individuals who are temporarily out of work through no fault of their own rather than those specifically impacted by a disability. Thus, the primary objective of a disability pension is to ensure that individuals who are unable to engage in their normal work due to a disability still receive some form of income support through an established plan from their employer.