Know your Pension Plan

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Retirement Pension Plan
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Know your Pension Plan
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• What after retirement? Do you have enough savings
  to sustain the same kind of lifestyle when you
  are no longer employed? Getting a substantial
  pension amount can be your answer to financial
  stability.
• A pension is a fixed amount that is paid to a
  person regularly after his retirement from
  service. Pension plan is a type of a retirement
  plan. A plan that makes sure that you are able to
  sustain your life even after your retirement.
• In most cases the company you work for provides a
  certain amount in monthly payments after
  retiring.
• A pension plan offered by the employers is
  available to the employees only after working in
  the organization for a certain number of years.
  The employer invests the employees contribution
  in a fund so that he or she can receive the
  benefits on retirement. The person receiving
  pension is called a Pensioner.
• Retirement plans may be offered by employers,
  insurance companies, trade unions or the
  government. Pensions funds that are created by
  the employers are also known as Such investments
  are tax exempted.

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Classification of retirement plans There are two
main classifications of pension plans available
in the market, defined benefit pension plan and
defined contribution plan. In a defined
benefit plan the employer guarantees that the
employee would receive a certain definite amount
of money on his retirement, no matter how the
investment fund performs. In other words the
retirement benefit amount is decided upon by a
formula on the basis of the employees salary
during his tenure, his age and tenure of
service. On the other hand in a defined
contribution plan, the benefits are dependent on
the market performance of the investments. In
such a plan a certain fixed amount or percentage
of money is reserved every year by the company
for its employees. However in such a fund, the
time and way in which money can be withdrawn is
limited.
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Types of pensions plans that are available 
Employment based pension In such a retirement
pension plan an amount is paid to a person on his
retirement from employment.  The employer and
employee contribute money to a fund account
during their employment so that they can receive
the benefits on retirement. Such income is
exempted from taxes by the government. Social
and state plan Some countries around the world
have created various types of funds so that they
can provide funds to their citizens and
residents. In such a case the people have to make
regular payments throughout their working life so
that they can receive it when they retire. There
are some plans, where older people are paid
pension though they do not contribute to the
fund. Disability plan Such a pension plan is
offered by the company if the employee suffers
from a disability. It could be an early entry
into a retirement package or even retirement
before the normal age limit.Life insurance
plans aim at making good the loss on the untimely
death of the insured, a pension plans helps an
individual to maintain his lifestyle in case he
survives beyond the retirement age. Source
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our-pension-plan
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