(Solution) Corporate Finance Assignment

Corporate Finance1
TERTIARY SECTOR EMPLOYEES’ CHOICE OF SUPERANNUATION PLAN
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Corporate Finance2
TERTIARY SECTOR EMPLOYEES’ CHOICE OF SUPERANNUATION PLAN
Introduction
Tertiary sector employees are people who work in a tertiary sector economy. It is among
the three sectors of the economy which comprises of intangible goods such as services, the
example of services offered are advice, experience, consumer services, banking and finance. The
other two sectors are the primary sector which is the first sector of economy comprising of
producing raw materials used in the second economy sector which is the secondary sector. The
secondary industry includes manufacturing of raw materials. After manufacturing in the
secondary area of the economy, the finished products are then packed and presented for sale in
the market. In the market, tertiary sector employees are now required to make a market decision
on where to purchase the finished goods and also market the products and services.
Superannuation
The super annual contribution was brought by the Australian government in inspiring
workers to save and finance for their imminent retirement plans. Superannuation contribution
was initiated by each employer contributing three percent of his salary to cater for the pension,
but it has grown to nine percent in two thousand and five. The reason for super annual influence
was conveyed for the determinations of eliminating affliction from the social sanctuary systems
for the provision of the pension payment to help employees in their retirement ages to ease their
lives. The super annual contribution is to enable workers to save; invest in gaining profits to
manage their ageing and also to help the non- working parties. Super annual and mutual
funding's now the leading in the Australia investments and also included in the equity security of
companies in both local and global share markets (Gallery, Newton and Palm 2011).

Corporate Finance3
The paramount superannuation speculation option is constantly for those that invest or
the ones who have the best financial consultants. Superannuation options are the ones to make
the employee achieve his goals, risk forbearances; venture partialities and profit desires. Some of
the options provided are currency and period payments, corporal possessions and interchange
transacted resources. Super annual contribution offers its individuals with the two forms of the
super annual plan the first one being a defined benefit plan and the last form being the
investment choice plan. (Lipsky 2010).
Self- coped super fund is among the best options of superannuation venture. Since it
gives employees a chance to monitor their investment plan through in quest of control and
clearness with their after tax supervision.
.
Defined benefit plan
A defined benefit plan suggest that the employees’ pension is calculated using a formula
and hence includes his / her benefit salary, his age and the overall number of years they were
employed. The employees who decide to follow the defined benefit plan under the super annual
contribution, their tremendous yearly involvement are taken and invested in the assets selected
by the company’s trustees (Ambachtsheer 2011). Even though the employee's contribution is
invested in assets and gains interests, it does not affect the employees' pension at all, since the
employees' final pension is calculated using the formula as available below.
Retirement benefit=period of membership*lump sum factor*average service
fraction*benefit salary
Benefit salary is the salary which the employee has been contributing to the company
each year while on the job; length of membership is the period which an employee was