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In the United States, a 401(k) plan is an employer-sponsored, defined-contribution, personal pension (savings) account, as defined in subsection 401(k) of the U.S. Internal Revenue Code. Periodic employee contributions come directly out of their paychecks, and may be matched by the employer. This legal option is what makes 401(k) plans attractive to employees, and many employers offer this option to their (full-time) workers. 401(k) payable is a general ledger account that contains the amount of 401(k) plan pension payments that an employer has an obligation to remit to a pension plan administrator. This account is classified as a payroll liability, since the amount owed should be paid within one year.
A pension is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work. A pension may be:
Sir Steven John Webb is a British pensions commentator who was previously Liberal Democrat Member of Parliament (MP) for Northavon from 1997 to 2010 and for Thornbury and Yate from 2010 to 2015. He was the Minister of State for Pensions in the coalition government of David Cameron.
Tax advantage refers to the economic bonus which applies to certain accounts or investments that are, by statute, tax-reduced, tax-deferred, or tax-free. Examples of tax-advantaged accounts and investments include retirement plans, education savings accounts, medical savings accounts, and government bonds. Governments establish tax advantages to encourage private individuals to contribute money when it is considered to be in the public interest.
The Central Provident Fund Board (CPFB), commonly known as the CPF Board or simply the Central Provident Fund (CPF), is a compulsory comprehensive savings and pension plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare, education and housing needs in Singapore.
Pensions in the United Kingdom, whereby United Kingdom tax payers have some of their wages deducted to save for retirement, can be categorised into three major divisions - state, occupational and personal pensions.
The pensions crisis or pensions timebomb is the predicted difficulty in paying for corporate or government employment retirement pensions in various countries, due to a difference between pension obligations and the resources set aside to fund them. The basic difficulty of the pension problem is that institutions must be sustained over far longer than the political planning horizon. Shifting demographics are causing a lower ratio of workers per retiree; contributing factors include retirees living longer, and lower birth rates. An international comparison of pension institution by countries is important to solve the pension crisis problem. There is significant debate regarding the magnitude and importance of the problem, as well as the solutions. One aspect and challenge of the "Pension timebomb" is that several countries' governments have a constitutional obligation to provide public services to its citizens, but the funding of these programs, such as healthcare are at a lack of funding, especially after the 2008 recession and the strain caused on the dependency ratio by an ageing population and a shrinking workforce, which increases costs of elderly care.
Superannuation in Australia or "super" is a savings system for workplace pensions in retirement. It involves money earned by an employee being placed into an investment fund to be made legally available to fund members upon retirement. Employers make compulsory payments to these funds at a proportion of their employee's wages. From July 2023, the mandatory minimum "guarantee" contribution is 11%, rising to 12% from 2025. The superannuation guarantee was introduced by the Hawke government to promote self-funded retirement savings, reducing reliance on a publicly funded pension system. Legislation to support the introduction of the superannuation guarantee was passed by the Keating Government in 1992.
A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts plus any investment earnings on the money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings. The most common type of defined contribution plan is a savings and thrift plan. Under this type of plan, the employee contributes a predetermined portion of his or her earnings to an individual account, all or part of which is matched by the employer.
A private pension is a plan into which individuals privately contribute from their earnings, which then will pay them a pension after retirement. It is an alternative to the state pension. Usually, individuals invest funds into saving schemes or mutual funds, run by insurance companies. Often private pensions are also run by the employer and are called occupational pensions. The contributions into private pension schemes are usually tax-deductible.
Libertarian paternalism is the idea that it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice, as well as the implementation of that idea. The term was coined by behavioral economist Richard Thaler and legal scholar Cass Sunstein in a 2003 article in the American Economic Review. The authors further elaborated upon their ideas in a more in-depth article published in the University of Chicago Law Review that same year. They propose that libertarian paternalism is paternalism in the sense that "it tries to influence choices in a way that will make choosers better off, as judged by themselves" ; note and consider, the concept paternalism specifically requires a restriction of choice. It is libertarian in the sense that it aims to ensure that "people should be free to opt out of specified arrangements if they choose to do so". The possibility to opt out is said to "preserve freedom of choice". Thaler and Sunstein published Nudge, a book-length defense of this political doctrine, in 2008.
KiwiSaver is a New Zealand savings scheme which has been operating since 2 July 2007. Participants can normally access their KiwiSaver funds only after the age of 65, but can withdraw them earlier in certain limited circumstances, for example if undergoing significant financial hardship or to use a deposit for a first home.
The National Employment Savings Trust (Nest) is a defined contribution workplace pension scheme in the United Kingdom. It was set up to facilitate automatic enrolment as part of the government's workplace pension reforms under the Pensions Act 2008. Due to its public service obligation, any UK employer can use Nest to meet its new workplace duties as set out in the Pensions Act 2008.
A target date fund (TDF), also known as a lifecycle fund, dynamic-risk fund, or age-based fund, is a collective investment scheme, often a mutual fund or a collective trust fund, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date approaches.
The National Pension System (NPS) is a defined-contribution pension system in India regulated by the Pension Fund Regulatory and Development Authority (PFRDA) which is under the jurisdiction of the Ministry of Finance of the Government of India. National Pension System Trust was established by PFRDA as per the provisions of the Indian Trusts Act of 1882 to take care of the assets and funds under this scheme for the best interest of the subscriber.
A minimum employer contribution is a mandatory pension contribution in the United Kingdom, which was made compulsory by the Pensions Act 2008, however it did not come into force until 2012. As a result, all staff are required to be automatically enrolled in a pension scheme when they join a firm. The Cameron Ministry modified this rule by means of the 2011 Pension Act, which brought the rule into force in a series of tranches of employers, over several years, instead of all at one moment.
A master trust in the UK is a multi-employer occupational pension scheme.
Atal Pension Yojana, formerly known as Swavalamban Yojana is a government-backed pension scheme in India, primarily targeted at the unorganised sector. It was mentioned in the year 2015 Budget speech by the Finance Minister Arun Jaitley. It was launched by Prime Minister Narendra Modi on 9 May 2015 in Kolkata. Its main objective is to help towards economic security of those people who become depressed after their working age and take retirement from professional life. Under pension schemes, people build their future financial security by making contributions so that they can live a prosperous and secure life even in old age.
Smart Pension is a pensions and retirement technology business, delivering pensions technology platforms in partnership with other financial institutions, and running a defined contribution master trust pension scheme setup for employers to enrol employees in a workplace pension scheme.
Compared to other liberal democracies, Ireland's pension policies have average coverage, which includes 78 percent of the workforce, and it offers different types of pensions for employees to choose from. The Irish pension system is designed as a pay-as-you-go program and is based on both public and private pension programs.
References
- ↑ "Home". www.oecd-ilibrary.org. Retrieved 2023-07-24.
- ↑ "Automatic Enrolment Retirement Saving System Bill". Mason Hayes & Curran. Retrieved 29 November 2023.
- ↑ "Pension Reform: A Giant Leap for Auto Enrolment?". mhc.ie. Mason Hayes & Curran. Retrieved 8 February 2024.
- ↑ Wolf, Martin (2023-02-19). "Britain can learn from Singapore on savings". Financial Times. Retrieved 2023-07-24.
- ↑ Jones, Rupert (2012-10-01). "Auto-enrolment pensions: all you need to know". The Guardian. ISSN 0261-3077 . Retrieved 2023-08-09.
- ↑ Collinson, Patrick (2019-10-24). "Watchdog hails success of auto-enrolment pensions". The Guardian. ISSN 0261-3077 . Retrieved 2023-08-09.
- ↑ Uddin, Rafe (2023-02-24). "Boost your pension every time you have a pay rise, says IFS". Financial Times. Retrieved 2023-09-12.
- ↑ Hosking, Patrick (2023-09-12). "Contribution to pensions must double, says Abrdn chief". The Times . ISSN 0140-0460 . Retrieved 2023-09-12.
- ↑ Thaler, Richard H. (September 26, 2009). "Opting in vs. Opting Out". The New York Times . Archived from the original on March 8, 2014. Retrieved March 7, 2014.