- Investing will help you maintain your current lifestyle.
- Help you secure your financial future.
- “Investing today is about more than just making money.”
- Decide today, where you would like to be tomorrow.
- Managing money during retirement is very different to managing money before retirement.
- Remember, if you do not save for your retirement, no one else will do it for you.
A corporate pension plan is a formal arrangement between the company and its employees that provides funding for the employees’ retirement. It is a retirement plan that requires the employer to make contributions into a pool of funds set aside for the employee’s future benefit. The pool of funds is invested on the employee’s behalf and the earnings on the investments, generate income for the employee upon his/her retirement.
Two of the most common corporate pension plans are the defined benefit and the defined contribution plans.
The retirement benefits of employees are based on a formula that calculates the contributions needed to meet the defined benefit, taking into consideration the duration of employment, salary history, the employee’s life expectancy and normal retirement age, possible changes to interest rates, annual retirement benefit amount and the potential for employee turnover.
When participating in this plan, the employer promises to pay employees a specific benefit for life, beginning at retirement. The benefit is calculated in advance, using a formula based on age, earnings and years of service. The employer is responsible for making all decisions regarding the fund.
These plans do not guarantee a certain benefit. Fixed contributions are paid into an individual account by employers and employees. The contributions are then invested and the returns on the investment are credited into the individual’s account. The payout from this rests solely on the success of the investments made.
On retirement, the member’s account is used to provide retirement benefits, usually through an annuity, which then provides a regular income. These plans have become widespread all over the world and are now the dominant form of plan in the private sector.