In the 21st century, a lot of us choose employment in order to meet our basic needs. With years of employment, we become experienced in the job we are doing. At some point, retirement will be necessary. To retire, we have to have a scheme that will allow us to live comfortably during this period.
Various strategies exist for this purpose. Preparing for the future by working your entire life is one of them. Other people have plans in place that pay them a certain sum of money periodically when they are no longer in employment. They call these plans pension plans.
Various types of pension plans described
The first plan is the ?Designed Benefit Pension Plan?. These plans are constructed in such a way that they provide a fixed amount of benefit after you retire. These are usually based on a formula that is used to calculate your pension benefits.
The formula used are the flat benefit formula, the best earning average and the career average earning formula.
The second kind of pension plan is Defined Contribution Pension Plans. Here, you receive a fixed amount in an investment account. When you retire, you get the investments along with the interest earned. The problem with this is you do not know what amount of money you will get when you retire. The amount will depend on how much is added to your plan by some other source or you. In addition, it will depend on the amount of interest you earn on the investment section of the plan. Some of these plans allow you to make decisions and some are made by a board of trustees or other persons in the organization.
These are the only two registered plans available. Other pension schemes do exist but these vary with your business? performance and affect your pension benefits that way.
Various strategies exist for this purpose. Preparing for the future by working your entire life is one of them. Other people have plans in place that pay them a certain sum of money periodically when they are no longer in employment. They call these plans pension plans.
Various types of pension plans described
The first plan is the ?Designed Benefit Pension Plan?. These plans are constructed in such a way that they provide a fixed amount of benefit after you retire. These are usually based on a formula that is used to calculate your pension benefits.
The formula used are the flat benefit formula, the best earning average and the career average earning formula.
The second kind of pension plan is Defined Contribution Pension Plans. Here, you receive a fixed amount in an investment account. When you retire, you get the investments along with the interest earned. The problem with this is you do not know what amount of money you will get when you retire. The amount will depend on how much is added to your plan by some other source or you. In addition, it will depend on the amount of interest you earn on the investment section of the plan. Some of these plans allow you to make decisions and some are made by a board of trustees or other persons in the organization.
These are the only two registered plans available. Other pension schemes do exist but these vary with your business? performance and affect your pension benefits that way.
About the Author:
I write for http://careermaster.soup.io where we all speak about diverse careers and out-of-doors. Have a look at the newest useful resource on What kind of job is a busboy? or Very easy techniques concerning how to get car hauler work opportunities
No comments:
Post a Comment