Superannuation as an organized pension program
Added on 2020-10-05
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Stating the important factors that tertiary sector employees should consider while decidingwhether to place superannuation contributions in the Defined Benefit Plan or the InvestmentChoice Plan..................................................................................................................................3CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTION Superannuation may be served as an organized pension program which is created by thefirm for the welfare or benefits of personnel. Such pension plan or scheme provides employeeswith financial support at the time of retirement. Further, fund deposited by the personnel insuperannuation grows with the high pace until retirement and withdrawal. In this, report willprovide deeper insight about the factors which personnel need to consider while movingsuperannuation contributions in the defined benefit plan. Besides this, it will shed light on theextent to which time value of money concept, taxes etc impact decision making aspect. Stating the important factors that tertiary sector employees should consider while decidingwhether to place superannuation contributions in the Defined Benefit Plan or the InvestmentChoice PlanIn the recent times, employers offer several retirement benefits to their personnel eithervoluntarily or for complying with statutory requirements. From assessment, it has identified thatretirement benefits contain provident fund, gratuity, national pension scheme etc (Niblock,Sinnewe and Heng, 2017). Hence, superannuation implies for retirement benefits which areoffered to the employees by the employer. Thus, every year employer contributes some moneyon the behalf of employees in superannuation policy held. Tertiary sector personnel mainlyinclude teachers, IT sector employees, and bankers etc which offer services to the customers. Defined benefit plan is the retirement framework that sponsored by employer. In thisplan, benefits of the personnel are assessed on the basis of several factors such as length ofemployment, salary details etc. In other words, defined benefit pension plan is the one whereemployer makes promises pertaining to specific pension payment, lump-sum on retirementconsidering earning history of personnel, tenure of employment, age etc (What Is the Differencebetween a Defined Benefit Plan and a Defined Contribution Plan, 2018). Under defined pensionbenefit plan, formula regarding the computation of employer’s and employee contribution isclearly defined. However, in this, benefits to be paid are not clearly defined in advance. Along with the defined benefits plan, there are several investment choices which can beundertaken for getting high returns from funds. Usually, individuals are highly concernedtowards their life after retirement in terms of financial security. Moreover, for carry out daily
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