Final answer:
Pension plans usually require participation to accrue benefits, with an emphasis on defined contribution plans like 401(k)s, where both employer and employee contributions are essential.
Step-by-step explanation:
The statement that pension plans only work if you participate in them is generally true. If an individual does not contribute to their pension plan, they will not have those funds available in retirement. However, it is important to distinguish between traditional defined benefits plans and defined contribution plans, such as 401(k)s and 403(b)s. Defined benefits plans provide a fixed income in retirement and do not always require direct contributions by employees, as they are typically funded by employers. On the other hand, defined contribution plans require active participation by employees, where both the employer and employee may contribute to the plan. These plans are portable, tax-deferred, and depend on the investment's performance, making them less susceptible to inflation compared to fixed-income pensions.