Final answer:
The employer typically contributes money on behalf of an employee to the local pension trust fund as part of traditional pension plans. Defined contribution plans like 401(k)s involve both employer and employee contributions, with the risk shifted to the employee.
Step-by-step explanation:
When considering who contributes money on your behalf to the local pension trust fund, typically the answer is the employer. In traditional pension plans, also known as defined benefit plans, employers are responsible for contributing to the pension fund. Furthermore, employers offering pensions are required by law to pay a small fraction of what they are setting aside for pensions to the Pension Benefit Guarantee Corporation, which serves as a safety net for employees if the company cannot fulfill its pension obligations due to bankruptcy.
Nowadays, these traditional pension plans are becoming less common and are being replaced by defined contribution plans like 401(k)s and 403(b)s. In a defined contribution plan, both employer and employee contribute a fixed amount regularly to the worker's retirement account. This amount is usually deducted from the employee's paycheck, and it goes into a tax-deferred retirement account that is portable between different employers. Importantly, in these plans, the burden of investment and the risk of inflation are shifted from employer to employee.