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Corporate Financial Management - Assignment Solution

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Added on  2021-06-16

Corporate Financial Management - Assignment Solution

   Added on 2021-06-16

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Corporate Financial Management
Corporate Financial Management - Assignment Solution_1
Table of ContentsIntroduction................................................................................................................................3Defined Benefit Plan..................................................................................................................3Investment Choice Plan..............................................................................................................4Different concepts guiding the decision.....................................................................................5Issues being considered in the decision making process...........................................................6Conclusion..................................................................................................................................8References..................................................................................................................................9
Corporate Financial Management - Assignment Solution_2
IntroductionIn order to retain the best talent within an organization, employers tend to provide them withcertain retirement benefits either through mandatory rules or voluntarily. Some of theretirement benefits include provident fund, National Pension scheme, gratuity etc.Superannuation is also a kind of retirement benefit provided by employers to their employees.Proper planning of superannuation will help employees to plan their retirement in an efficientmanner [ CITATION Cle18 \l 16393 ]. In Australia, the government of the country makesarrangements regarding superannuation so that the people are able to accumulate a certainsum of money for their better retirement [ CITATION Aus181 \l 16393 ]. According to theAustralian law, an employer deposits the money in a super account which is maintainedunder an employee’s name. 9.5 per cent of the employee’s income including all the otherincomes like bonuses, commissions, etc. is deposited as superannuation under the employee’sname. This is called as Super Guarantee in Australia [ CITATION Ind182 \l 16393 ]. This amount is decided by the employees to contribute in different investment models likeDefined Benefit Plan and Investment Choice Plan. A detailed description of these twoinvestment models has been discussed below:Defined Benefit PlanDefined benefit plan in simple terms can be understood as an employer sponsored retirementplan which aims to provide benefits to employees at the time of their retirement. This iscomputed through a specific formula which is based on different factors like length of theemployment as well as the salary trend of the employee. In this method, there are restrictionson the time as well as the method selected for withdrawal of funds by the employees[ CITATION Inv18 \l 16393 ]. This plan is called as defined benefit plan because theemployees as well as the employers know the formula beforehand for measuring the
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