Pension Reform evokes certain primary questions: what is a Pension System? What is its essence? Why do governments interfere in this area throughout the industrial world and increasingly in developing countries? (Modigliani and Murahlidhar, 2004).
2.1.1 The Concept of Pension
Pensions are a form of Social Security for the retired. It is meant to serve as a supplementary source of income to retired workers when their current earning power ceases (Modigliani and Murahlidhar, 2004). It has been defined as "a sum of money paid regularly to a person who no longer works because of age, disablement etc., or to his widow or dependent children, by the state, by his former employers or from funds to which he and his employers have both contributed" (Onifade, 2001). According to the third edition of Longman Dictionary of Contemporary English (2000), the word Pension is an amount of money paid regularly by a government or a company to someone who is officially considered to be too old or ill to earn money by working. Alternatively, pension can also be defined as periodic payment to one who retired from work as a result of old age or disability (Chinwuba 2004).
2.1.2 The Concept of Pension Scheme
A Pension Scheme or System however, is the totality of plans, procedures and legal processes of securing and setting aside funds to meet the social obligation of care which employers owe their employees on retirement or in case of death and disability (NICON, Abuja). It serves as a structured method of providing economic security to an individual when he can no longer support himself. As a pre-arranged and well thought out plan, it gives the beneficiaries the confidence that the benefits promised are being properly arranged and will be paid at the appropriate time (Onifade, 2001). It can also be viewed as a financial plan by which a worker's benefit is provided whenever it falls due according to the rules of the plan (Chinwuba 2004).
2.1.3 The Essence and Features of Pension Schemes
The primary purpose of a Pension System is to help households achieve an allocation of life resources by smoothing consumption over life, as postulated in the LifeCycle Hypothesis (LCH). This is achieved by transferring resources from ones working life to post-retirement when income dries up (Modigliani and Muralidhar, 2004).
There are basically three reasons for the existence of Pension Plans. These are: Social Insurance, Re-distribution, and Savings (Modigliani and Muralidhar, 2004).
The push for Congress to pass legislation protecting the rights of employees and their retirement was inevitable. Retirement plans are extremely important for all working individuals. Having funds to keep or exceed ones current standard of living and to enjoy one’s life beyond expectations after retire...
Patrick, C 2004, The Guardian: Australia may hold key to pensions, 12 October 2004, retrieved 21 July 2006
In America’s early days before the kickoff of industry, there was little need for retirement savings for a few key reasons. First of all, people were dying at a much earlier age; most people didn’t live past 38, whereas in 1900, 60 years of age was common for about 40 percent of the population and 15 percent experienced 80 years of life. Another reason for the irrelevance of social security in the 19th century and earlier was that people were usually living rurally on farms with extended families to take care of them. Furthermore, the Civil War also didn’t allow the government much economic room to consider providing a service such as social security. However, after the Civil War, pensions were a form of social security for civil war veterans that carried into their retirement. Unfortunately these pensions provided support for only a very small portion of the population; not even one percent of Americans received these pensions. Despite a much lower need for social security in the 18th ...
Investment opportunities with pension plan members to offer them additional services (cross-over), as well as to reinvest their pension plan earnings after they retire (roll-over);
providing retirement benefits to those who have reached the ages of sixty-two or age sixty-five,
Bibliography Cubeddu, Luis. A. "Intragenerational Redistribution in Unfunded Pension Systems." International Monetary Fund Staff Papers March 2000: 90. Fast Facts and Figures about Social Security. August 2000.
Through the years, people age and become less productive. For these reasons, they have to prepare some plans that help them secure their own future. But, there are instances that lead an individual to an early retirement. Some lack motivation and enthusiasm in their work. Others are not capable of working anymore as well because of the health issues that they are facing. Regardless of the reason, it is important that one has to work so that by the time they retire, they will not end up broke. Having this in mind, many people are already investing in a simple IRA.
The liberals introduced an old age pension for people over seventy years old and with no other income. They also introduced a married couples pension. Pensions were not a new thing but the most radical thing about these pensions was that they were entirely government funded. The pension was not incredibly large and the average working class person did not live to be 70 but for those who did the pension made them independent. In the year after the introduction 80000 people stopped claiming relief from charities.
Pension provides an income when people have stopped working. Also, it provides important forms of insurance against long life, prices, relative benefit drops and savings shocks. As well as it is an important benefactor to the financial security of a majority of Australian men and women of retirement age, with about 70 per cent of people of pension age receiving the Age Pension (Australia and Treasury, 2015). The government can provide this type of insurance for less than it costs individuals to insure themselves by sharing long life risk, and hedging the
External pressure from our Life Insurance partners wanted us to commit to using their services. Life Insurance had designed and implemented an accounting system a few years ago that provided wonderful functionality. This system is being used by most of the enterprise although there is no corporate mandate requiring administration areas to use it. While the functionality of this system is quite detailed and impressive, it fails to meet all of the needs of the annuity business customers. Because the annuity business requirements were quite extensive, the life insurance group could not commit to the necessary enhancements that would be required to their system to satisfy annuity users. Because of these business requirements, we then conducted an extensive analysis to determine what Annuities IT could do to satisfy the business requirements. The analysis revealed that we could build our own accounting system for only 25% of the cost of using the life insurance system.
A personal financial plan is essentially important for any person and their loved ones to minimize future hardships and difficult financial situations. Short and long-term financial freedom and stability is something an individual wants to have through to the end of his or her life. Financially planning for one’s retirement years is vital so a person does not sustain major unhappiness or unnecessary pain in what is supposed to be the reward for working so hard in their younger years.
Allers, Kimberly Seals. "How Fit Are Your Finances?" Ebony 68.9 (2013): 93-97. Academic Search Complete. Web. 15 Nov. 2013. Bauer, Gabrielle, and John Southerst. "A promising retirement: your life, your way." Maclean's 18 Feb. 2013: 37+. Opposing Viewpoints in Context. Web. 15 Nov. 2013.
Retirement planning is a way to insure that you will have enough income to live comfortably when you retire. Most people will be retired 25 years or more, and careful planning is the key to successful retirement. Why would you want to have bill pressures and mortgages when all you really want to do is relax, or follow that dream of traveling the country in an RV?
With the new structure of social security it provides pension to retired or disabled American, the social security is financed by the Federal Ins...
The importance of saving for retirement is all based on how the individual wants their lifestyle to be after their career. The sooner they begin saving and investing their money, the more profound lifestyle they are bound to live. There is a saving plan called the 401(k) that lets employees have a percentage of their net pay withdrawn before taxes. This helps significantly if they are planning to retire earlier on in their lifetime because it can also lower the amount of taxes owed each take which essentially is more money in your pocket every paycheck. America as a whole downplays the significance of saving for retirement until they get of a certain age and they are too drained to get up for work and work a full shift as they would when they were of a younger age. Typically, when living in retirement you are free to travel and reach goals you were not able to achieve because life and work got in the way. Enjoying your retirement is the goal, not to make your retirement a burden to you or their