Retirement Provision Plans, or Retirement Plans for short, are investment plans offered by employers to their employees to help and entice employees to make provision for their retirement. These plans are usually developed by insurance companies in close co-operation with government to provide low cost, tax deferred, investment opportunities to employees. Invariably these plans have some rigid rules to regulate the investment.
In February 2000 a study was published by Olivia S Mitchell and John Piggot of the Pension Research Council in Philadelphia. The title is: Developments in Retirement Provision. I quote from this report:
'Retirement systems should be conceived of as long-term financial contracts under which workers’ contributions today are exchanged for benefits paid to the elderly tomorrow. Such contracts are said to be well-managed if the transactions are handled in an affordable, reliable, and efficient manner. Yet all pension systems are forced to operate under a multitude of constraints including participants’ ability and willingness to save; the availability of assets with which to convert current saving into future retirement benefits; the limitations of imperfect capital markets; political influences imposed by stakeholders; country macroeconomic conditions; and as we are becoming increasingly aware, global business cycles. If pensions are to continue to meet the needs of an aging world, it is imperative to prepare for emerging challenges as these systems evolve through time.'
Retirement Plans are thus very well established and regulated and one would expect that employees are well provided for by the time they retire. However, reality is that in most cases the provision is inadequate. One reason is that employees contribute the bare minimum to these plans because retirement is not a priority, mainly in the early years of employment.
Another reason is asset leakage. In the report mentioned above it is put as follows:
'As funds accumulate in these plans, there will be increasing pressure to permit participants to 'use' the assets for a variety of well-intentioned purposes. This is already evident in the US where participants can obtain their funds under conditions of hardship, which is defined to include needing a down payment on a home or sending a child to college.'
Below we discuss some Retirement Provision Plans:
Your retirement savings account includes the balances of all your retirement provision efforts and savings. It is ultimately the only solid and reliable indicator of your net worth and thus your chances to provide for a comfortable retirement.
Deferred compensation plans are very similar to other retirement plans, but beware: There might be a sting in its tail!
Retirement Savings Plans is a generic term used for retirement provision plans. Many plans are available and each plan is designed for a specific category of employees.
The Total Individual Account Retirement Plan Assets, by demographics, was the subject of a 2010 study by Craig Copeland and published by the Employee Benefit Research Institute.
My retirement plan evolved over the years. It started as no plan at all, a state that remained unchanged for too long! But eventually it was formalized and over the years I refined and adapted the plan.
Retirement fund rollovers, done in the right way, protect your retirement money from yourself!
Time to think about retirement plans for small business? Entrepreneurs, who started a small business, work long and exhausting hours and have very little time to think about a retirement savings account.
A self employment retirement plan is usually the last thing on a self employed person's mind.
And if you are based in the United States of America there are the following Retirement Plans to consider:
Understand 401k Retirement Plans
403b Retirement Plans then?
The 457 Retirement Plans are available to governmental and certain non-governmental employers.
In the Untied States of America individual retirement account rules are applied to the ever popular Individual Retirement Arrangement (or IRA).
401a Retirement plans, or money-purchase plans, are retirement savings plans in which you - the employee - can’t choose or change the amount contributed to the plan.
A 401k loan is not an option if you are serious about your retirement planning and provision.
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