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PLANS
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PLANS Pension
- is an arrangement to provide people with anincome when they are no longer earning aregular income from employment.
- it should not be confused with severance pay .Difference:
pension
is paid in one lump sum.severance pay - is paid in regular installments
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Pension
is to describe the payments a person receivesupon retirement, usually under pre-determined legal and/or contractual terms.
pensioner or retiree - is the recipient of aretirement pension
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Retirement Plan
refer to a pension granted upon retirement.may be set up by employers, insurance
companiesother terms:
pension schemes in the UK
superannuation plans in Australia and NewZealand
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occupational or employer pension - a pensioncreated by an employer for the benefit of anemployee
- a form of deferred compensation
deferred compensation - is an arrangement inwhich a portion of an employee's income ispaid out at a date after which that income isactually earned.
tax-deferred not paying the tax until themoney is distributed, usually uponretirement.
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Payout Options
two payout options as a lump sum gives immediate control of
the whole amount as monthly payments can offer the benefit
of guaranteed income for life.
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Employer retirement plans
help employees save for the future to assistthem in providing for themselves and theirfamilies after retirement.
** The larger the group of employees, the lowerthe cost to both employers and employees.
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Advantages
provide employees opportunities for abetter return on their retirement
investment .payments are automatically deductedfrom the paycheck which encourages
savings .
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Disadvantages An employee do not control how much theemployer contributes and the types of savings options within the plan.traditional pension plans are not
transferrable.Some retirement plans permits an employeeto take the funds he contributed and any
interest earned on those funds if he leave thecompany. However, if the employee leavebefore a designated number of years, he willreceive none of the contributions made bythe employer.
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Types of Plans
Employer-Sponsored RetirementPlans Individual Retirement Plan
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Employee-SponsoredRetirement Plans
diversifybasic Employer plans
pension plans
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Diversify
options on how retirement funds areinvested for growth, income, and capitalpreservation.
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Basic employer plans
available through an employertax-deferred you pay no taxes until it is
distributed or withdrawn
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Pension plans
also called define-benefit plans determineshow much a person is going to be paid.
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Individual Retirement Plan
Annuities a legal contract with an insurancecompany that provides for either a lump-sumor a series of payments.
- can: help reduce current taxable income Provide future income for retirement Accumulate cash reserves for emergencies
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Plan for retirement
Social security is the security which societyprovides for is members by sharing risks fromthe stoppage on reduction of earningresulting from sickness, maternity, death,invalidity, old age and unemployment, theprovision of medical care and the provision of
child allowance.The insured person is the employee who starts
working at the age of not under 15 and not
over 60 years old in the enterprise with 1 ormore em lo ees.
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1. Social Security CardThe insured person will receive the Social
Security Card after registration for 5 days (notincluding the period spending by post.)2. Medical Card
The insured persons will receive theMedical Card after registration and paycontribution for 3 months.
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Benefits:
sickness or injuries free of charge at theregistered hospital and cash benefits due tosick leave
- pay for not less than 3 months within 15monthsinvalidity medical treatment and cashbenefit
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death funeral grant and survivorsallowance
- not less than 12 months within 36monthsMaternity not less than 7months within 15months child allowance not less than a yr within 36months old-age not less than 180 months, 55 yrsold
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End
Of
Chapter 5