Write an equivalent paper describing the various retirement plans (sponsored by both the Government of your country, and/or private employers), and how you plan to care for your retirement.
Before beginning this assignment, consult text and be sure you understand:
1. DEFINED BENEFIT (TRADITIONAL PENSION) PLAN: Pays a retiree a specified annual retirement as long as the person lives. The amount of the annual retirement payment will be based on a formula specified by the employer. (These vary from employer to employer, but usually include the number of years worked for the firm, the person’s salary while working, and some %.)
2. DEFINED CONTRIBUTION PLAN (Also known as a 401k program after the section of the IRS Code which gives them tax deferred status): Pays some specified amount each pay period into an account over which the employee will have some investment options. Once vested, the employee literally owns these funds, and they stay with the employee (if the employee takes the initiative to convert the funds into their own Individual Retirement Account which maintains tax deferred advantages) throughout their life. In a defined contribution plan, once the employee leaves a firm, that firm has no obligation to provide further funds to the employee.
3. VESTING: Whether DB or DC, vesting means that the employee literally owns the retirement or pension benefit. If you are not vested, you do not own anything. You can find more information here: http://www.dol.gov/ebsa/publications/wyskapr.html
(When you use this website look only at Defined Benefit, Defined Contribution and Vesting. That is all you need for the assignment. Read more later if you like.)
Minimum vesting rules (Pension Reform Act, 2006) are:
100% @ 3 years and 0% before 3 years
