Defined Benefit Plan: Factors and Decision-Making Process

DEFINED BENEFIT
PLAN
Module Number-
[DATE]
HEWLETT-PACKARD
[Company address]

Table of Contents
Introduction............................................................................................................... 1
Description of the different plans..................................................................................... 2
Investment choice plan.............................................................................................. 2
Defined benefit plan................................................................................................. 2
Factors considered by tertiary sector employees in deciding whether to place their superannuation
contributions in the Defined Benefit Plan or the Investment Choice Plan....................................3
Issues relating to the concept of the time value of money, taxes etc., might be important in this
decision-making process............................................................................................... 4
Conclusion................................................................................................................ 5
References................................................................................................................ 7

Introduction
The need of people now for fulfilling their service requirements is now being satiated
successfully by the emerging tertiary sector of economy. The gap between the requirement of
service and its efficient fulfilments is reduced to a negligible sphere now. The tertiary sector
of economy has phased out the tension which earlier existed in the economy in relation to the
consumer demand of high quality and appropriate services. This sector of economy is
indulged in the provision of every possible service to fulfil the customer requirements. The
development of any economy in the current era is determined when its focus shifts from the
primary and secondary sector towards the tertiary sector (Yow, 2016). The different kind of
service organisation and businesses that formulate the tertiary sector include schools,
financial institutions, restaurants, transportation business, salon services, and etc. The list is
almost unending.
Like any other sector of economy, the tertiary sector also employs employees in several fields
to get the business running. These employees are termed as tertiary sector employees. The
employees of this sector also get several benefits in addition to the basic salary attached to
their jobs. These benefits could be in cash or in kind. One such benefit in cash superannuation
contribution, which although is not paid to employees immediately but certainly towards the
future help of employees. The traits of this fund are similar to pension fund. Both employee
and employer make monthly contribution to this fund where money gets accumulated. The
sense of future financial security is created in the employees’ mind due to creation of this
fund. The choice of placing the contributions of superannuation can be varied depending
from one country to another. Likewise, the Australian superannuation funds popularly
provide two major choices being, investment choice plan and defined benefit plan
(Cummings, 2016).