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A pension is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments. A pension may be a "defined benefit plan", where a fixed sum is paid regularly to a person, or a "defined contribution plan", under which a fixed sum is invested that then becomes available at retirement age. Pensions should not be confused with severance pay; the former is usually paid in regular hillbillys for life after retirement, while the latter is typically paid as a fixed amount after involuntary termination of employment before retirement.
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
In the United States, Social Security is the commonly used term for the federal Old-Age, Survivors, and Disability Insurance (OASDI) program and is administered by the Social Security Administration. The original Social Security Act was signed into law by Franklin D. Roosevelt in 1935, and the current version of the Act, as amended, encompasses several social welfare and social insurance programs.
A retirement plan is a financial arrangement designed to replace employment income upon retirement. These plans may be set up by employers, insurance companies, trade unions, the government, or other institutions. Congress has expressed a desire to encourage responsible retirement planning by granting favorable tax treatment to a wide variety of plans. Federal tax aspects of retirement plans in the United States are based on provisions of the Internal Revenue Code and the plans are regulated by the Department of Labor under the provisions of the Employee Retirement Income Security Act (ERISA).
The U.S. Railroad Retirement Board (RRB) is an independent agency in the executive branch of the United States government created in 1935 to administer a social insurance program providing retirement benefits to the country's railroad workers.
Social welfare, assistance for the ill or otherwise disabled and the old, has long been provided in Japan by both the government and private companies. Beginning in the 1920s, the Japanese government enacted a series of welfare programs, based mainly on European models, to provide medical care and financial support. During the post-war period, a comprehensive system of social security was gradually established.
Social security is divided by the Indian government into seven branches: healthcare; old age/retirement benefits; unemployment insurance; life and disability insurance; maternity and childcare benefits; rural job guarantee; and food security. The Central Government of India's social security and welfare expenditures are a substantial portion of the official budget and well as budgets of social security bodies, and state and local governments play roles in developing and implementing social security policies. Additional welfare measure systems are also uniquely operated by various state governments. The government uses the unique identity number (Aadhar) that every Indian possesses to distribute welfare measures in India. The Code On Social Security, 2020 is part of the Indian labor code that deals employees' social security and have generous provisions on retirement pension, healthcare insurance and medical benefits, sick pay and leaves, unemployment benefits and paid parental leaves. The largest employment related social security programs backed by The Code On Social Security, 2020 are the Employees' Provident Fund Organisation for retirement pension, provident fund, life and disability insurance and the Employees' State Insurance for healthcare and unemployment benefits along with sick pays. There is also the National Pension System which is increasingly gaining popularity. These are funded through social insurance contributions on the payroll. While the National Food Security Act, 2013, that assures food security to all Indians, is funded through the general taxation.
In France employees of some government-owned corporations enjoy a special retirement plan, collectively known as régimes spéciaux de retraite. These professions include employees of the SNCF, the RATP, the electrical and gas companies which used to be government-owned; as well as some employees whose functions are directly related to the State such as the military, French National Police, sailors, Civil law notaries' assistants, employees of the Opéra de Paris, etc. The main differences between the special retirement plan and the usual private sector retirement plans are the retirement age and the number of years a worker must contribute to the fund before being allowed a full pension. In the private sector the minimum retirement age is 62 and the minimum number of quarters of contribution to the retirement fund in order to receive a full pension is between 166 and 172 quarters depending on date of birth. Employees who are enrolled in the special retirement plan can retire earlier.
Social security is divided by the French government into five branches: illness; old age/retirement; family; work accident; and occupational disease. From an institutional point of view, French social security is made up of diverse organismes. The system is divided into three main Regimes: the General Regime, the Farm Regime, and the Self-employed Regime. In addition there are numerous special regimes dating from prior to the creation of the state system in the mid-to-late 1940s.
A defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. Traditionally, many governmental and public entities, as well as a large number of corporations, provide defined benefit plans, sometimes as a means of compensating workers in lieu of increased pay.
Mexico reformed its pension system in 1997, transforming it from a pay as you go (PAYG), defined benefit (DB) scheme to a fully funded, private and mandatory defined contribution (DC) scheme. The reform was modeled after the pension reforms in Chile in the early 1980s, and was a result of recommendations from the World Bank. On December 10, 2020, the Mexican pension system would again undergo a major reform.
Pensions in Norway fall into three major divisions; State Pensions, Occupational Pensions and Individual or personal Pensions.
The Japanese Kokumin Nenkin (国民年金) national pension is a pension system that all registered residents of Japan, both Japanese and foreign, are required to enroll in. Since January 1, 2010 it has been managed by the Japan Pension Service.
Pensions in Germany are based on a “three pillar system”.
Pensions in Spain consist of a mandatory state pension scheme, and voluntary company and individual pension provision.
India operates a complex pension system. There are however three major pillars to the Indian pension system: the solidarity social assistance called the National Social Assistance Programme (NSAP) for the elderly poor, the civil servants pension and the mandatory defined contribution pension programs run by the Employees' Provident Fund Organisation of India for private sector employees and employees of state owned companies, and several voluntary plans.
The Swiss pension system rests on three pillars:
South Korea's pension scheme was introduced relatively recently, compared to other democratic nations. Half of the country's population aged 65 and over lives in relative poverty, or nearly four times the 13% average for member countries of the Organisation for Economic Co-operation and Development (OECD). This makes old age poverty an urgent social problem. Public social spending by general government is half the OECD average, and is the lowest as a percentage of GDP among OECD member countries.
Pensions in Denmark consist of both private and public programs, all managed by the Agency for the Modernisation of Public Administration under the Ministry of Finance. Denmark created a multipillar system, consisting of an unfunded social pension scheme, occupational pensions, and voluntary personal pension plans. Denmark's system is a close resemblance to that encouraged by the World Bank in 1994, emphasizing the international importance of establishing multifaceted pension systems based on public old-age benefit plans to cover the basic needs of the elderly. The Danish system employed a flat-rate benefit funded by the government budget and available to all Danish residents. The employment-based contribution plans are negotiated between employers and employees at the individual firm or profession level, and cover individuals by labor market systems. These plans have emerged as a result of the centralized wage agreements and company policies guaranteeing minimum rates of interest. The last pillar of the Danish pension system is income derived from tax-subsidized personal pension plans, established with life insurance companies and banks. Personal pensions are inspired by tax considerations, desirable to people not covered by the occupational scheme.
A pay-as-you-go pension plan is a retirement scheme, where as in which a said contributor can choose how much money they would like to be deducted regularly from either their paycheck, or by perhaps a lump sum to their own retirement fund. The funds they choose to provide goes towards a retirement plan which can be then redeemed upon reaching retirement age.
References
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- 1 2 "Vietnam to raise retirement age from 2021 - Xinhua | English.news.cn". www.xinhuanet.com. Retrieved 2020-10-29.
- ↑ "Vietnam's NA passes raising retirement age". hanoitimes.vn. Retrieved 2020-10-29.
- 1 2 3 "Best IRA Accounts of 2021".
- 1 2 Giang, Thanh Long (April 2004). "The Pension Scheme in Vietnam: Current Status and Challenges in an Aging Society". mpra.ub.uni-muenchen.de. Retrieved 2020-10-29.
- 1 2 3 Giang Thanh Long (26 March 2014). "A Brief on the Vietnamese Pension Schemes" (PDF).
