...SBP UK pension system can be divided three levels. First-tier pension, which is provided by the state basic pension; second-tier pension is known as state additional pension, which include state additional pension, occupational schemes and personal pensions. The third-tier pension is extra contributions to second tier pension schemes and other savings and investments. The state basic pension (SBP) is built up most people’s retirement income. It is often paid at a flat rate to everyone who qualifies for the full pension gets the same, however, some people who have a complete National Insurance record can get a reduced amount. People who earn at least a minimum amount 84 per week in 2006-7; or choose not to pay NIC; or people who are being credited with National Insurance; or people not in the above categories who volunteer to pay NIC, are their can get basic pension. For 2010-11, single person can obtain 97.65 per week from the state basic pension. In working life, the state pension age of man is 65 and the woman is 60, which is on the basis of the tax years from one in which you reach age 16 to the last complete tax year before you reach state pension age. Each year National Insurance was paid contribution is called a qualifying year. The Basic State Pension is connected with the UK National Insurance record of the individual. The class 1 contributions paid by employees; class 2 contribution paid by self-employed and class 3 contribution voluntary counts. Before 6 April...
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...Pension Plans vs. Contribution Plans A retirement plan is a savings and investment plan that provides income during retirement. Many times it is created by employers for employees. However, many people do not know the difference between a pension plan and a contribution plan. For example, they may believe that a 401K is their pension plan when in reality it is a contribution plan. Therefore, one should first learn to define what a pension plan is and what a contribution plan is. A defined benefit plan, also known as a pension plan, and a defined contribution plan, a 401K or 403B are just two main types of employer retirement plans. A defined benefit is a plan that pays you a specific amount of money monthly or in a lump sum, when you retire as part of your retirement benefits. This plan focuses on output and the benefits may not depend upon the amount of an account balance. (Kennedy & Shultz III – 2012) The amount issued are usually based on formulas and on criteria such as number of years worked at a company and salary earned. For the most part the employer pays the complete cost of a pension plan or defined benefit thus the investment risk rest with the employer. Let’s first consider the details of the defined benefit plan. According to Lewis and Clark (2009) “Participants of a defined benefit plans are promised a specified sum regardless of the investment of the plan.” This type of benefit is designed to replace all of the participants’ pre-retirement income...
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...for helpful comments, and to the National Institute of Aging for research support under grant number P01 AG005842. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. © 2006 by James Poterba, Joshua Rauh, Steven Venti, and David Wise. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Defined Contribution Plans, Defined Benefit Plans, and the Accumulation of Retirement Wealth James Poterba, Joshua Rauh, Steven Venti, and David Wise NBER Working Paper No. 12597 October 2006 JEL No. J14,J26,J32 ABSTRACT The private pension structure in the United States, once dominated by defined benefit (DB) plans, is currently divided between defined contribution (DC) and DB plans. Wealth accumulation in DC plans depends on the participant's contribution behavior and on financial market returns, while accumulation in DB plans is sensitive to a participant's labor market experience and to plan parameters. This paper simulates the distribution of retirement wealth, as well as the average level of such...
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...Pension Questionnaire To make sure that you are offered the correct pension options, your employer and Civil Service Pensions (CSP) need to know about your pension history. Please answer the questions on the following pages. Your employer will use your answers to work out which of the CSP schemes you can join. Try to answer the questions as accurately as you can. Once you have completed this questionnaire return it as soon as possible and CSP will let you know what your pension choices will be. Make sure you add your National Insurance (NI) number at the top of each page. Section 1 | Your personal data | | | Your full name | | | | Your NI number | | | | Your date of birth | | | | Your start date | | | | Your NI number: | | Section 2 | Your pension information | Have you ever been a member of a public service pension scheme? Public services employers include the Civil Service, judiciary workers, teachers, members of the armed forces, fire and rescue services, the police, health service workers, and local government employees. You can find more information here: www.legislation.gov.uk/ukpga/2013/25/schedule/1Answer this question with details of your latest period of pension scheme membership. | | Which scheme? | At which employer? | | What date did you leave? | | Sections to complete | | | | | | | | | | | | | Civil Service pension arrangements | | | | | 3, 4, 5, 7 | | | | | | | | |...
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...Pension Reporting and Segment Elimination Requirements Deborah Hunter, Stephanie Murray, James Newsome, Sharon Stubbs, and Star Troutman ACC 541 January 14, 2013 Shauki Smith MEMORANDUM TO: CEO FROM: Team A DATE: January 14, 2013 SUBJECT: Pension Reporting and Segment Elimination Requirements CC: Shauki Smith This memo serves to provide an explanation of required reporting for define contribution, defined benefit, and other postretirement plans. In addition to pension reporting requirements, an explanation of the requirements for eliminating segments is also provided. Defined Contribution Plan In a defined contribution plan, companies will define how much they plan to contribute each period to the employee’s retirement benefits. The company defines the period. The company will contribute the amount to a funding agency such as a pension fund. The company is not liable for the amount of benefits the employee receives upon retirement. Therefore, the company must only contribute the amount that was set forth each period. Defined benefit plans, on the other hand, are more complex. Instead of contributing each period to the employees retirement account, the company agrees to provide a certain benefit amount each period upon retirement. Therefore, the company must ensure that the funding for such plans are adequate to cover the employee’s retirement benefit plan. Non-GAAP Funding Methods A company that offers defined benefit plans to their employees...
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...Running Head: Pension Plans Abstract The goal of pension plans is to provide a fixed income for individuals during retirement. In practice, this means either paying employees a fixed income when they reach a predetermined retirement age or can no longer work due to disability (Dessler, 2005, p. 492). However, since the 1980’s the number of employers offering pension plans has declined. Once considered a common benefit in the workplace and motivator for senior employees to remain with the organization, private pension plans has drastically dropped 74 percent (Carrell & Heavrin, 2007, p. 329). This research paper will first explain how pension plans are classified and then identify several reasons why pension plans has declined. Moreover, it will discuss which pension plans are in use today, and finally, what regulations govern pension plans. Private Pension Plans: America’s Vanishing Benefit When one company after another reneges on its pension obligation toward current and future employees, you know it’s going to get ugly. Just ask any veteran employee of a major airline who may only receive half the value of his/her pension upon retirement. Walsh (2004) reported that United Airlines’ pension payment debt nearly topped $23.4 billion along with another $1 billion for retiree health care benefits (para. 11). In other words, pension payments have the potential to basically bankrupt an industry. How should companies challenge the rising cost of retirement...
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...Pension expenses have risen over the past decade and this rise in pension is expense is as a result of numerous factors. According to the detailed report by John C. Liu, the two main contributing factors to the disproportionate increase in New York City’s pension costs are lower investment returns and benefits enhancement put in 2000. Mayor Bloomberg believes that the primary reason for the increase is the benefits enhancement. This partially ties in with Liu’s findings from his research, as Liu believes it’s one of the two primary reasons for the increase. Mayor Giuliani, the New York City mayor from 1994 to 2001, increased pension benefits in the 90s because the city was benefiting from the bull market. This resulted in an increase in pension fund investment profits and thus the Giuliani increased pension benefits. The increase in investment returns reduced the pension expenses incurred by businesses thus making them feel as though the markets will soar forever. Companies got comfortable with the bull market since they were incurring less pension cost. However, they had little knowledge that they were setting themselves up for failure since the rate will balance out in the long run. This failure was triggered over the past decade when the bear market hit thus resulting in a major decrease in investment returns. This significantly increased the pension expense due to the gap between benefit obligation and plan assets that resulted from continuous decline in actual return on plant...
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...The Mammoth Has Arrived: Pension Plans and the darkness that lies within The mammoth has arrived. In the last decade pension obligations have become a serious problem that many organizations are struggling with. The mammoth I speak of is the gigantic pension obligations that are billions of dollars underfunded. The wake of a new era has arisen and organizations are faced with the after effects of years of erroneous expectations on returns on plan assets. The problem has become so explicit that organizations are now overwhelmed and are scrambling to rectify the threats it poses. In this paper I will be using the terms “organization” and “firm” interchangeably. This topic is at the forefront of debate and concern for fortune 500 firms. In consideration of the magnitude and reality of the issues I felt compelled to take a deeper look into the topic. Moreover, I will use this opportunity to illustrate the complexity and seriousness of the issue. The task I am about to dive into will require a moderate overview of pension accounting. That is, I will dissect pension accounting from its roots and try to exemplify a story that has a clear beginning, but lacks any real practical ending. As such, in this paper I will cover the following areas in detail to demonstrate the perplexity that aluminates when this is topic is fetched from the dark holes of the financial statements and put into a context that is, too many, preposterous. This paper...
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...Article Analysis —— Pension and property?1 Written by ZOU Yue, DENG Ziqing, CHEN Mengfei Nowadays, the world is facing with a same question, aging population. As a following question, pension has caught world’s attention. Moreover, it seems that old pension policy cannot afford a comfortable retirement due to the rising house prices and inflation. Compared with pension, the article “pension or property – what’s the best plan for retirement” discussed a new way that some people may rely on for their retirement, which is investment in property. From the article, numbers of people decided to depend on property, buy-to-let properties or sell themselves-use properties, to provide an income for their retirement, rather than pensions as traditional. Because pension schemes with uncertain return would lock away their money until they are retired, and refund them with pool value at final. It is reasonable that pensions may have lower return than investment. We can get this conclusion by using a simple model. Suppose that an individual’s lifetime has two periods, then we denote rA as the annuity rate, rP as the yield rate of property, s1 means how much money the individual saves as pension, i means the amount of money individual invest in property, y1 is the income in period 1, c1 is the consumption in period 1. We have y1-c1= s, where s is equal to i. Therefore the individual will have the return on pension in period 2 which is s(1+r A), or have the return on property in period 2 which...
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...Defined Benefit and Defined Contribution Pension Plans What are the advantages and disadvantages of a Defined Benefit Pension Plan? Advantages of a Defined Benefit Pension Plan •Provides an explicit benefit which is easily communicated •Time to invest not as crucial a factor for older employees •Older employees may receive more benefit than under a DCPP •Payroll deduction possible for employee contributions •Past service benefits possible Disadvantages of a Defined Benefit Pension Plan •Employees rarely participate in investment decisions •Employees receive reasonable rates of return on termination Employer absorbs risk associated with changes in interest rates and investment returns •Employer is responsible for funding any plan deficit, but the fund surplus must be shared with employees if plan is wound up •Actuarial evaluations required by law •More difficult to provide early retirement calculations •Future employer costs are more difficult to project •Employer is responsible for funding any plan deficits •Higher administration costs What are the advantages and disadvantages of a Defined Contribution Pension Plan? Advantages of a Defined Contribution Pension Plan: •Payroll deduction possible for employee contributions •Plan context is easy to understand and communicate •Employees can participate in investment decisions •Actuarial calculations of funding not required •No surplus or deficit in pension fund to manage •Contributions are tax...
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...A pension is defined as a benefit promised to an employee when they retire and are no longer receiving a regular salary. There are two main versions of pensions in Canada, these are: * Defined Benefit Pension Plan- This plan has a set amount of money that needs to be in the pension account when the employee is retiring. This amount is found using a formula that is mainly based on years of service to the company and the employee’s salary. The employer continues to make payments into the pension account, and pays the employee the pension when they are retiring. This means that all the risk associated with this pension plan is placed on the employer. Some advantages to this plan are the security of your pension; you know exactly how much you should receive at the end of your working life time and know exactly how much is being paid into the pension each time. This pension plan also has some definite disadvantages as well. The biggest one is that the money you are placing into the pool of pensions can be invested into anything that the trustees feel fit to invest in, and you have no say in what they invest in. This may become a problem if the investments don’t work out and there is a huge loss in the pension pool, resulting in a higher risk of you not receiving your pension as you retire. However this risk is placed on the employer and gives a better sense of security for the employees’ pension. The employer is forced to pay more money into the pension to make up the difference...
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...June 29, 2010 Sub: Acquisition & Pension Plans Acquisition Analysis & Benefits from Acquisition The 100% acquisition of other business by the manufacturing company will be beneficial. It is because; full acquisition of the other business will bring two new segments for the manufacturing company that will pose a higher growth rate. It will also facilitate two new pension plans that will be beneficial to motivate the employees. But at the same time, the two segments and pension plans are entirely new for the business that may affect its profitability and effectiveness. The 100% acquisition by the manufacturing company will facilitate opportunity of the business expansion by intensifying its existing business activities. The manufacturing business would be able to capture new market and business areas by eliminating the need of setting up the business in new areas. It would also be helpful to establish a competitive advantage for the business that would cause an increase in its competitive position. The acquisition would increase the efficiency in resource utilization that would reduce competition in the industry. The business expansion would cause an increase in market share of manufacturing company that would increase awareness about the product and services of it. Thus, acquisition will be beneficial for manufacturing company. Pension Plans The 100% acquisition of other company by the manufacturing company will also bring two new pension plans that will be effective to...
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...`THE DEVELOPED WORLD IS AGEING AND IS THERFORE FACING A PENSION CRISIS` WORDS COUNT: 797 DATA: 10/03/2012 Going back through human history elderly people were only tiny minority of the population. In 1935 when Social Security Scheme was introduced to prevent poverty in old age elderly people accounted for only 3 to 4%of the population. Nobody suspected that in the future the developed world would face pension crisis caused by shifting demographic. Rising longevity and falling birth rates would cause a lower ratio of workers per retire,which will result in difficulty in paying for state or federal pension. Nowadays people are living longer than ever before and retirement pensions have become a problem. At present “developed countries are experiencing a dramatic and unprecedented demographic transformation” (Jackson and Howe, 2008) which may lead to pension crisis in the nearer future. This essay highlights two key problems that are causing development world aging and emphasise the importance for solution to prevent developed countries from pension crisis. The fact that developed countries are aging is a result of two fundamental trends like falling fertility and rising longevity. Falling fertility is reflected in a decrease in the number of young people. Declining birth rate is a result of changes in women`s life styles. Nowadays women in developed countries getting higher education and taking paid jobs; career comes before having babies. This means getting married...
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...employees with a pension plan for many years. Through the use of a funding agency, payments are invested so that periodic payments can be made to the employee during retirement. Defined contribution and defined benefit are the two most common type of pension plans. However, employers offer additional retirement benefits such as tuition assistance, healthcare, life insurance, and housing subsidies (Schroeder, Clark, & Cathey, 2011, p. 470) as guided by SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions.” Each plan caries different risk and benefits for employer and employee. A brief summary is hereby provided to aid in deciding the appropriate plan for the company. Defined Contribution Defined contributions plans are rapidly becoming the preferred plan for most firms. The plan offers less risk to employers because employees make contribution towards retirement funds. Employees contribute a set percentage, taken from the salary, to the plan. Funds are invested into a plan such as a 401K or Thrift Savings Plan (TSP) for Federal employees. The amount the retiree receives is based on the return on investment at the receipt. That is, the benefits the recipients earn are based on the stability of the investment and the return earned on funds during the time of investment. The risk of the investment is borne by the employee as the market changes in value. The employer’s responsibility is the “annual contribution to the pension plan fund” (Schroeder...
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...Union Boilermaker Positional Comparison Kennedy Tank and Manufacturing vs The State of Indiana vs National Average Robert C. Owens IUPUI OLS 476 December 4, 2011 TABLE OF CONTENTS TABLE OF CONTENTS………………………………………………………………………2 INTRODUCTION……………………………………………………………………………...3 ORGANIZATION ANALYSIS ……………………………………………….........................3 VISSION………………………………………………………………………………………..4 MISSION……………………………………………………………………………………….4 SALARY AND BENEFITS COMPARISON………………………………………………….5 CHART 1A……………………………………………………………………………………..6 INTERNAL ASSESSMENT…………………………………………………………………...7 EXTERNAL ASSESSMENT…………………………………………………………………..9 CONCLUSION………...……………………………………………………………………….9 REFERENCES………………………………………………………………………………...10 CHARTS/ATTACHMENTS………………………………………………………………11-15 INTRODUCTION: Mechanical construction is a career field that is physically demanding and also quite interesting. Within a Mechanical construction company, there are several different types of workers and employees. A key component of mechanical construction is the boilermakers. First, a boilermaker is union or non-union work. Union or non-union work is based on the company for which the boilermaker works for. Also, there are many different zones for which boilermakers can be a part of based on the type of training they have completed. In this report it will focus on Union Zone One Journeyman Boilermaker in Indianapolis, Indiana. The local for which Union Zone One Journeyman Boilermakers are a part of is...
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