Defined Benefit And Defined Contribution In Pension Schemes Accounting Essay

...Start of the Defined Benefit And Defined Contribution In Pension Schemes Accounting Essay...

Pension is fund that is built during the working life of the employee and then used to secure the income after retirement. These funds can be operated by employer (occupational pension) who invests over time or alternatively employee can invest in a fund of their choice (private pension scheme). Both of these schemes generate income after retirement. The pension funds are operated in many countries. According to international financial service the UK pension fund is $1,464 billion, Germany had $268 billion and France had $164 billion.

...Middle of the Defined Benefit And Defined Contribution In Pension Schemes Accounting Essay...

In UK there is an upper limit to the level of income from a define benefit scheme where as there is no such upper limit to the level of income generated from define contribution scheme. Hence the economic conditions like inflation, cost of living etc will have less effect on the employees in defined contribution scheme. Employees have no control over the investment decisions in the defined benefit scheme and are only eligible for predetermined excess returns on the investment where as in defined contribution scheme employees have full control of their investment and eligible for receipt of all the returns on the investment. Define contribution scheme can be easily transferred between employers as employee changes his job this may involve some additional cost and hence the employee can continue making investment in his own pension fund.

...End of the Defined Benefit And Defined Contribution In Pension Schemes Accounting Essay...

Although employers are prefering define benefit scheme now a days, certainly when looking back at the recent credit crunch andtroubled financial markets, it was not uncommon for defined benefit arrangements to be holding surpluses and/or to be taking contribution holidays This will not be possible under a defined contribution scheme where the employer is required to maintain the agreed level of contributions irrespective of how well the investments are performing. When employers try to compare the real overall cost of providing a typical defined benefit scheme with a typical defined contribution scheme, they usually forget that employers benefit from favorable investment returns with defined benefit schemes as many defined benefit arrangements actually cost a lot less when contribution reductions and contribution holidays are taken into account.

Hire Writer Login and Download 1796 words (4.5 pages)

Did not find what you were looking for?

We will write for you an essay on any given topic for 3 hours

Order now!

Add Your Comment

Related essays

Defined Benefit And Define Contribution Pension Schemes Accounting Essay

These include their earnings path, which is a key input directly to define benefit wealth accruals and which affects the capacity to make define contribution contributions, the economic fortunes of their employer, which may lead to changes in the retirement plan parameters, their job tenure and the number of jobs they hold over their working career,...

2386 words (6.0 pages)
Employee Benefits and Retirement Planning in South African Taxation

A common non-wage benefit is the contribution to a compulsory (or in some instances, contractual or private) social security or insurance scheme (e.g., pension or savings plan, casualty and life insurance, health and maternity care, and severance pay or unemployment insurance) established for the employee in which the employer (and, in many cases, t...

2201 words (5.5 pages)
Reformation of China’s Pension Scheme

That is, the notional accounts system benefit has a defined contribution, but its means of financing is still PAYGO; therefore it is called a Notional Defined Contribution system. Although the transformation from the current PAYGO defined benefit system to a fully funded defined contribution system is one of the main trends of reform, a small number...

4959 words (12.4 pages)
Need for Universal Social Security and Pension Schemes

The accepted defined benefit pension system, which was the broader goal of a welfare state, is slowly giving way to the defined contribution system where risk is borne by the final beneficiaries. Pension reforms in India in the last decade have seen three major initiatives – a paradigmatic shift in the civil servants’ pension scheme, the National Pe...

2292 words (5.7 pages)
The values and principles of Prudential plc

“Prudential UK is an example of a large organisation taking advantage of open source technologies to drive new and efficient computing standards without having to replace equipment, software and networks that have been built up over many years,” commented Rob Davies, Director of FUSE Engineering at Progress Software Corporation and co-founder of the...

4599 words (11.5 pages)
Factors That Affect the UK Pension Crisis

Barr (2006, 4) argues that ‘[a]verage age at death in the UK (and similarly in other countries) has been rising steadily at least since 1860… Clearly, as more and more people live to pensionable age and, having achieved that, live longer and longer beyond that, the costs of pensions rise and, as a proposition in pure logic, rise disproportionately.’...

2890 words (7.2 pages)
Mauritius National Pension Fund Financial Analysis

As Boulding (1958) puts it in his argument, those who do not insure will have to be supported anyway-perhaps at lower levels and in humiliating and respect-destroying ways when they are in their non-productive phase of their life, but that they will escape the burden of paying premiums when they are in their productive phase. Pension funds is be def...

5037 words (12.6 pages)
An Argument for Social Security Reform

Social security refers to the OASDI that is the old age survivors and disability insurance and in the US these, services are provided through programs like Medicare, Medicaid, SCHIP, SSI, unemployment insurance and the Federal old age, survivors and Disability insurance. (Tanner, 1996 in Hyde & Dixon p.195) says that social security would benefi...

5599 words (14.0 pages)
The Private Pension Industry In Ghana Accounting Essay

Ghana’s social security system lacks cohesion as evidenced in the disparities that exists under the SSNIT and CAP 30 an there is an urgent need for the harmonization of the social security system in Ghana by replacing the current systems with a comprehensive all inclusive system .. Over the years concerns have been raised about the disparities and ...

5090 words (12.7 pages)
Individual Income Tax

An example would be a military pension Alimony- alimony and separate maintenance payments are generally for AGI deductions by the party making the payments and are includable in the gross income of the party receiving payments. Types of exclusions- municipal bonds interest, gifts, inheritances, child support payments, and loans Standard deduction- M...

2081 words (5.2 pages)
× We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Login with Social Media