What Are the Different Types of Retirement Income Funds?

Retirement funds are a typical life cycle concept product. Such funds usually allocate funds to a wide range of assets, such as various stocks and bonds. At the same time, according to the retirement date preset by the investor, the fund will automatically adjust the asset allocation ratio regularly, that is, gradually reduce the risk of the investment portfolio as the target customer's retirement date approaches.

Retirement fund

Right!

Retirement funds are a typical life cycle concept product. Such funds usually allocate funds to a wide range of assets, such as various stocks and bonds. At the same time, according to the retirement date preset by the investor, the fund will automatically adjust the asset allocation ratio regularly, that is, gradually reduce the risk of the investment portfolio as the target customer's retirement date approaches.

Chinese name

Retirement fund

Foreign name

Retirement fund

Part of the service remuneration paid to employees by the employees or staff of an enterprise or institution after retirement. Retirement measures formulated by enterprises should be conducive to improving the enthusiasm of employees for their work, so that they can rely on their old age, which is beneficial to the stability of the society and the improvement of corporate efficiency.

In practice, the methods of raising pensions formulated by enterprises can be divided into retirement methods for deposited funds and retirement methods for unfunded funds.

Retirement methods can be divided into defined contribution pension plans and defined benefit pension plans based on the determination of pension benefits.

Retirement methods are divided into a common pension plan (non-contributory pension plan) and a non-common pension plan (noncontributory pension plan) according to whether employees participate in the withdrawal of retirement funds.

The retirement method can be divided into one-time payment and installment payment according to the payment method of the pension.

Retirement fund

The enterprise withdraws the retirement fund and gives it to an independent trust institution, such as a bank or insurance company, for its custody and use. When the employee retires, the trust institution pays the retirement fund from the retirement fund. Unless the enterprise has fully fulfilled its obligation to pay pensions, it shall not recover the retirement funds.

Unfunded retirement

The enterprise has not withdrawn the retirement fund and handed it over to the trust institution for custody and use, or the enterprise has withdrawn the retirement fund but kept it for its own use and has not handed it over to the trust institution for its custody and use. When employees retire, the enterprise will raise funds to pay the retirement fund. Compared with the retirement method of deposit funds, this method lacks protection for employees' pensions.

Agreed deposit method

A defined comtribution pension plan is an enterprise that withdraws a certain amount of retirement funds each year in accordance with the provisions of the retirement measures and transfers them to a trust institution for safekeeping. When an employee retires, the retirement fund belonging to the employee is paid to the retired staff. Generally, a fixed amount of funds is drawn every year according to a certain percentage of the employee's salary (such as 5% of the salary). The retirement pension that an employee can receive depends on the amount of the deposit and the interest accrued. The company does not guarantee retirement. The amount of money paid. The amount of retirement funds drawn by an enterprise in each period is the retirement cost that should be recognized in the current period. The accounting treatment of the agreed withdrawal method is relatively simple. It only needs to debit the retirement cost and credit the cash when withdrawing. There is no other entry. Most of our enterprises use this approach.

Contracted retirement plan

A defined benefit pension plan is an enterprise that promises to pay a certain amount of pension at one time when an employee retires, or pay a certain amount of pension in installments when an employee retires; as long as the enterprise is able to fulfill its obligation to pay the pension when the employee retires Whether a company withdraws its retirement funds on time is up to the enterprise. Under this approach, the amount of retirement benefits is usually determined based on the employee's salary level and length of service, or both need to be considered, or only one of them, such as the length of service. The former is called the final wage method, and the latter is called the fixed payment method.

Joint pension withdrawal

Contributory pension plan refers to the withdrawal of retirement funds by enterprises and employees, which are handed over to independent trust institutions for safekeeping. The proportion of withdrawals from both parties may not be the same. If employees leave early, they can recover the principal and interest they have withdrawn, and whether they can share the funds withdrawn by the enterprise depends on the provisions of the retirement measures. At present, China, the state, enterprises and employees jointly withdraw pension funds.

Non-joint withdrawal method

Non-contributory pension plan is a method in which all retirement funds are promoted by the enterprise, and employees are not involved in the promotion. Most retirement methods in the United States fall into this category.

Lump sum pension

It refers to a one-time payment of retirement benefits after an employee has retired. The enterprise has no obligation to pay for the retirement of employees after paying the pension.

Retirement payments

It refers to the payment of instalments after the retirement of an employee until death, such as monthly or annual payments.