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Corporate Financial Management - Assignment

   

Added on  2021-05-11

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Assignment Cover PageFamily Name: GotameGiven Name: BeghanathStudent Number: 12001077Lecturer’s Name: Masoud AHMADI-PIRSHAHIDSubject Name: FIN200 Corporate Financial ManagementAssignment Title: Superannuation

Title: Important factors to be considered when placing Superannuationcontribution

IntroductionSuperannuation is known as Super as well as the money that the employers contribute to the employee’s superannuation fund accounts while the employees work, and the employers pay 9.5% to the superannuation account of the total salary of the employees. The money from the superannuation can be used after retirement and, each employee can contribute their extra money towards super [ CITATION QSu21 \l 3081 ]. A defined benefit plan is a job retirement plan in which employee benefits are calculated using a formula that considers a number of factors, such as employment length and history of the salary. The company is accountable for overseeing the investment and risk of the plan and the company will normally appoint a manager from outside to do so [ CITATION Jul20 \l 3081 ]. An investment choice plan is the hybrid scheme which is the accumulation and defined benefit combined together where four types of investment choice strategies to choose from and that is Growth, balanced, conservative and cash and members can mix up all four investment choices or choose only one [ CITATION Sta21 \l 3081 ]. Defined-Benefit planA defined benefit plan, quite frequently known as a pension plan, provides secured retirement benefits for employees, and a defined benefit plan is funded by the company or employers in a large amount. This plan is a qualified employer-sponsored plan for the retirement of the employees and the employees are qualified to get certain tax benefits. The defined benefit plan is based on the factors such as the employment period with the company, the salary of the employees, and age as well. So, the company might offer a different plan which pays 1.5% of the average salary for the last five years of the employment year when you were working at the company and if you work for 20 years and then you may get 30% of the average over the years [ CITATION Kat20 \l 3081 ]. A defined benefit plan ensures a special benefit or payment on retirement and typically, the employer funds the plan by contributing a standard amount, normally a percentage of the employee's salary, to atax-deferred account. Upon retirement, the plan will pay payments over the lifetime of the employee or as a lump-sum payment. For instance, a 30-year retirement pension plan may provide an exact dollar amount for the benefit, like $150 per monthfor each year of the worker's service. The plan will indeed pay the employee $4,500 per month when they retire. If the employee dies, a few other plans will allocate any residual perks to the beneficiaries of the employee. [ CITATION Jul20 \l 3081 ]. The defined benefit plan is managed by the employer so it is less risky for the employees and there is no cost for the employees. Pros of Defined Benefit planA defined benefit plan delivers income in retirement without effort and cost, apart from turning up to work. And then that payment lasts for all across retirement, making it much easier to budget for retirement. You also can organise for a reduced payment to be made so that your family member will continue receiving income

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