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. For us to be able to retire, we have to prepare a method of earning substantial income.
There are many methods of doing this. 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.
A description of various pension plans that exist
The first is called a Designed Benefit Pension Plan. A fixed sum of money is paid periodically after retirement that is arrived at by using formula that helps determine your aggregate pension benefits.
The formula used are the flat benefit formula, the best earning average and the career average earning formula.
Defined Contribution Pension Plans are another kind of pension plan. Here, a standard amount is paid into an investment account every month. On retirement, a lump sum is received but the amount received will previously have not been known. The amount varies with the amount your scheme is supplemented by an external source. The sum of interest you have earned for your interest too will influence this. Certain pensions permit you to control much of that happens whereas others give a board of trustees this responsibility.
The two schemes described above are the only 2 that are registered. Other pension schemes do exist but these vary with your business? performance and affect your pension benefits that way.
There are many methods of doing this. 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.
A description of various pension plans that exist
The first is called a Designed Benefit Pension Plan. A fixed sum of money is paid periodically after retirement that is arrived at by using formula that helps determine your aggregate pension benefits.
The formula used are the flat benefit formula, the best earning average and the career average earning formula.
Defined Contribution Pension Plans are another kind of pension plan. Here, a standard amount is paid into an investment account every month. On retirement, a lump sum is received but the amount received will previously have not been known. The amount varies with the amount your scheme is supplemented by an external source. The sum of interest you have earned for your interest too will influence this. Certain pensions permit you to control much of that happens whereas others give a board of trustees this responsibility.
The two schemes described above are the only 2 that are registered. Other pension schemes do exist but these vary with your business? performance and affect your pension benefits that way.
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