When you invest for your retirement through products such as the National Pension System (NPS) or a retirement plan offered by life insurance companies, the construction of the product is such that at the end of the investment period – at your retirement – you take the accumulated corpus to
In recent years, traditional retirement plans, also called pension funds, have been gradually disappearing from the private sector. Today, public sector employees, such as civil servants, are the largest group with active and growing pension funds. This article explains how other traditional pension plans work. Key points to remember Traditional
A superannuation plan is a retirement plan that requires an employer to make contributions to a pool of funds set aside for a worker’s future benefits. The fund pool is invested in the employee’s name, and earnings on the investments generate income for the retired worker. Pension fund assets must
At first glance, lofty investment return assumptions may seem unreasonably optimistic, but pension plans have a potential justification. Some accounting rules for public pension plans provide grounds for optimism, as public plans discount their liabilities based on their assumed rate of return rather than a credit rate of appropriate duration.