The amount of income an elderly individual under the age of 70 has earned outside of his or her social security benefits. Seniors could face a reduction in social security payments or possibly even cancellation if the outside earnings are substantial.
An individual responsible for managing the day-to-day affairs and the strategic decisions involved with a group's pension fund/plan. More specifically, the plan administrator ensures that money is being contributed into the fund, the proper asset allocation decisions are made and that payouts are promptly distributed among all qualified plan participants or beneficiaries. For smaller companies, and for simplicity and cost savings purposes, the employer may elect to be the company's pension plan administrator. However, as the number of employees grows, the task will often become more time consuming and complex and it is often more worthwhile for the employer to hire a professional to be the pension plan administrator. In terms of fiduciary duty, the pension plan administrator has a duty to act in the interest of the plan's participants and not the underlying company.
One of three pension formats as outlined by the World Bank in 1998 and which has since been adopted by many economically reforming countries in Central and Eastern Europe. The goal of the three-pillar system is to separate the major objectives of pension (retirement) plans into the following pillars: Pillar 1 – A standardized, state-run pension system, which offers basic coverage and is primarily focused on reducing poverty. Pillar 2 – A funded system that recipients and employers pay into; this includes pension funds and defined-contribution accounts/plans. Pillar 3 – Voluntary private funded accounts, including individual savings plans, insurance, etc. The three-pillar system outlined here very closely resembles what we see in the United States:Pillar 1 – Social Security provides basic but universal coverage. Pillar 2 – Comprised of 401(k)s and other employer plans Pillar 3 – Personal savings and investment plans This multi-tiered system is seen as more effective than having one state-run pension system to serve all citizens.
A set of options that a pensioner has in regard to the handling of his or her pension. Pensioners must make choices that determine how the funds will be distributed, and they must weigh the advantages and disadvantages of each option to determine which will work best for their financial and family situation. Some of the pension options from which pensioners must choose will determine if a spouse will continue to have benefits in the event of the pensioner's death, or if benefits will be paid only during the life of the pensioner. Options that must be examined include lump-sum distributions, single life and joint and survivor pension payout options. For instance, if a pensioner opts for a single life annuity, he or she can expect larger monthly benefit payments, but a spouse will not be eligible to continue receiving benefits if widowed.
A fund established by an employer to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement. Pension funds are commonly run by some sort of financial intermediary for the company and its employees, although some larger corporations operate their pension funds in-house. Pension funds control relatively large amounts of capital and represent the largest institutional investors in many nations.
An accounting term used to describe the amount of money a company must pay into a defined-benefit pension plan to satisfy all pension entitlements that have been earned by employees up to that date. The pension benefit obligation (PBO) is calculated by an actuary, who determines the benefits needed through a present value calculation. A pension benefit obligation is a calculation of the total amount due to employees in the pension fund for all of the past service completed up to that date. Some of the assumptions an actuary will use to calculate the PBO include, but are not limited to, the estimated remaining service life of employees, salary raises and the mortality rates of employees.Although a PBO is classified as a liability on the balance sheet, there is considerable criticism about whether it meets the predefined criteria of a liability, which are: a) There is a responsibility to surrender an asset from the result of the transaction(s) taking place at a specified future date. b) The company must surrender assets for the liability at some future point in time. c) The transaction resulting in the liability has already taken place.
A numerical calculation in certain Canadian pension plans that reverses a previously assumed pension value. This can occur when an employee leaves a company after a short period of time and before he or she is vested. As a result, the employee may only have his or her pension contributions and not any employer contributions. The pension adjustment reversal "reverses" the overstated pension adjustments, since the employer contributions are not counted. The pension adjustment reversal reduces the amount of money that has been contributed in that year's pension plan, thereby increasing the Registered Retirement Savings Plan (RRSP) deduction limit. In order to be eligible for a pension adjustment reversal, the employee must terminate his or her membership in the pension plan (for example, by transferring benefits to a Registered Retirement Savings Plan), but not necessarily his or her employment with the company. Conversely, an employee who leaves a company but continues membership in the pension plan is not eligible for the PAR.
The amount of contributions that can be made to a Registered Retirement Savings Plan (RRSP) on top of any contributions to a Registered Pension Plan (RPP) in a given year. An individual can choose to contribute this amount to a registered plan such as a Registered Retirement Savings Plan (RRSP), or he or she can defer this amount until later years when the tax deduction will be more useful.
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