Pension can be defined as a regular source of income provided by the employer to the employee after retirement. This employer may be a private company, corporation or government itself. Again there are several other pension plans where individuals have to invest at a regular basis or have to invest at a time to enjoy the pension facilities after retirement. At the same time, there are several pension plans that offer a good amount of cash to the employee at time of retirement but denies the responsibility of providing regular pension. The terms and conditions regarding pension after retirement are pre-planned and the pension is provided according to the contracts between the employee and the employer.
Apart from paying money to the retired employee at a time or at regular basis, there are several pension plans that are designed to provide insurance facilities to the pension receivers. This facility is provided by those plans that cover the family of the pension holder after his or her death. There are different types pension plans that exist in today’s market. Some of these are contribution plans, benefit plans, hybrid plans, cash balance plans, superannuation plans and many more.
The benefit plans is also known as the traditional pension plan provided to the employees. The benefits that are provided through this particular plan depend on a number of factors. These factors include a number of factors that are related to the service period, retirement age and many more.
In the contribution plans the employee contributes a particular amount of money. That money is then invested in the financial markets by the employer and the returns are credited to the employee’s personal account. This accumulated money is used to provide pension and other retirement benefits to the employee.
Now in the present market, the traditional pension plans are becoming a burden for the governments or the corporations and so on. The population rise and the rising number of aged persons are becoming a matter of concern for the pension providers. So, the pension providers are looking for new ways to reduce their financial burdens and to provide benefits to the employees also.
Last Updated on : 1st July 2013