StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The United Kingdom Pension System - Case Study Example

Comments (0) Cite this document
Summary
The paper "The United Kingdom Pension System" discusses that hedge funds are a good option for investment, but only if the pension fund is large, there is an option of a long lockup period, and there is a strong reason to justify paying huge hedge fund manager fees…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91% of users find it useful
The United Kingdom Pension System
Read TextPreview

Extract of sample "The United Kingdom Pension System"

Download file to see previous pages A pension that is created by an employer for an employee is known as an occupational pension. The government or other organisations may also sponsor pensions. Pension plans are a form of deferred compensation.
The United Kingdom pension system is characterised by three tiers. The first tier is that of Basic State Pension (BSP) which is provided by the state. There are several pension schemes in the second tier. The state, employers, or private sector financial institutions provide these schemes. These pension schemes may be divided into two broad types: Defined Benefit (DB) pension schemes, and Defined Contributions pension scheme (DC). The DB schemes include the State-Earning-Related-Pension Scheme (SERPS), and occupational pension schemes provided by employers. The DC schemes include the contribution pension schemes offered by employers, and the personal pension, or a stakeholder pension fund held with a financial institution. The third tier of the UK's pension system is voluntary and it takes the form of additional voluntary contributions (AVCs and FSAVCs) into occupational or personal pension schemes.
The pension schemes we need to focus on behalf of the company are occupational pension schemes. ...
In the DB pension scheme, the retirement pension benefits are related to the member's final salary upon retirement, and length of service. This is a "funded" plan in which both employer and employee contributions towards the pension fund. A DC pension scheme is a scheme that provides an individual account for each employee participant. The benefits are solely on the amount contributed to the account, gains, expenses and losses allocated to the account. The plan contributions, which are fixed for both the employer and employee, are paid into the account for each member. These contributions are invested and the returns are also credited to the individual's account. On retirement, the member's account is used to provide retirement benefits. This is usually through the purchase of an annuity that provides regular income post-retirement. The members also have the option to draw a certain lump sum amount before purchasing annuities. These plans also may offer the facility to members to select the types of investments towards which the pension funds would be allocated.
Relative Merits of DB and DC Schemes
The contributions in case of DB schemes are higher to keep up with the cost of providing the defined retirement benefits. It is even higher for employers relative to employees.
DB plans offer less mobility than the DC plans because the transfer costs and difficulty in the transfer of funds are very high for the DB Plans. DC plans offer higher portability.
Both the DB and DC plans offer tax relief on contributions to employers. Tax relief is usually higher in case of DB plans due to higher contributions.
Unlike the DB schemes, in a DC scheme, a member cannot predict his pension at the time of retirement, as it is difficult to predict what capital he will accumulate at the time of retirement. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Financial Markets & Risks Case Study Example | Topics and Well Written Essays - 1750 words, n.d.)
Financial Markets & Risks Case Study Example | Topics and Well Written Essays - 1750 words. https://studentshare.org/macro-microeconomics/1505738-financial-markets-risks
(Financial Markets & Risks Case Study Example | Topics and Well Written Essays - 1750 Words)
Financial Markets & Risks Case Study Example | Topics and Well Written Essays - 1750 Words. https://studentshare.org/macro-microeconomics/1505738-financial-markets-risks.
“Financial Markets & Risks Case Study Example | Topics and Well Written Essays - 1750 Words”. https://studentshare.org/macro-microeconomics/1505738-financial-markets-risks.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The United Kingdom Pension System

Financial Markets & Risks

16 Pages(4000 words)Essay

Service Management in Financial Services

11 Pages(2750 words)Case Study

Risks of Smoking whilst Pregnant

8 Pages(2000 words)Assignment

Unmarried Parents: Financial Provisions

6 Pages(1500 words)Case Study

Money & Capital Markets

10 Pages(2500 words)Assignment

Accounting & Financial Management

10 Pages(2500 words)Assignment

Financial Management Analysis of Rio Tinto Plc

8 Pages(2000 words)Case Study

Costs, Benefits and Risks of MerloniS Current Distribution System

10 Pages(2500 words)Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

10 Pages(2500 words)Research Paper

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

20 Pages(5000 words)Literature review

Management of Financial Institutions

8 Pages(2000 words)Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic The United Kingdom Pension System for FREE!

Contact Us