Introduction To Pension Plans
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Every employee working with any company and belonging to any age group must apply for a suitable pension plan. If the pension is planned, then you may get quite a large sum of money once you retire. But the amount you get does not depend entirely on your planning but also on the kinds of plan you choose and its rules of governance.
There are several kinds of pension plans available and they all have their own rules of governance that decide when and how much money you are going to get afterwards. Some of these plans are definite and provide you certain specific amount. Under such pension plans, an employee gets the pension amount on the basis of their salaries after they retire. In such plans, the employee as well as the employer contribute to the plan.
On the other hand, there is another kind of pension plan available which offers you an amount after retirement and this amount is dependent on your service tenure. This further depends on the amount of salary that one draws till the time they retire. Such schemes are known as money purchase plans. Thus the total amount of the employee depends on his annual contribution as well as the employee & the employers invest towards such plans.
There is yet another pension plan known as personal pension. This one is started by employee on their own. Under this plan, the employer is not bound to contribute towards the plan. Employees are free to decide the amount to be put in such pension plans. The amount received after retirement depends on the way investments have been performed all these years.
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