So this time, one of my summer courses is Pensions & Benefits (LABR3140) taught by Karen Naylor. It is quite interesting to learn about Pensions. I know most people hardly know anything about Pensions beside them being deducted off their pay check. Well, its important to get some knowledge on them. One should know the kind of pensions he or she is eligible to...is it a defined benefit or contributory? A defined benefit pension is the one which an employer promises to give you a certain amount of money after you retire- Usually every month. There are terms and conditions that come with this...for instance, how many years you have worked with the employer?...It usually depends how the amount of money will be calculated. Again, there are ways to calculate it like by taking:
the accural rate x salary/earnings x pensionable service
for instance 3% x 60,000 x 30yrs
The common used way of calculating pension benefit also known as the "gold plate" where the calculation will be based on your best working years for instance the highest period within the ten years so your last five years. It depends. I'm just giving examples. Or the other method of pensions benefit plan is by unknown earnings where it will depend.
The other type of pensions is called defined contribution pension. As it says, "contribution" so both the employee and employer do have to put in a certain amount of money into the plan. It will be difficult to have an actual figure on how much pension will be given back once an employee retires. So the actuaries become useful here, they help in assuming how much will be given back based on the life expectancy and the investment returns from the funds.
So my dears, don't just let that money go off the pay check without knowing whats going on...its good to find out & understand how things are running. I'm always happy with a clear mind. Besides, Its your right to acquire knowledge about anything based on given opportunities... You have a Right to know, Right to Participate and Right to Refuse. There you go...Be sure to find out what type of pension plan you are in? In the first place, Does your workplace have pensions plan?
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