Access over 20 million homework & study documents

Meaning of contribution plan and benefits

Content type
User Generated
School
amity university
Rating
Showing Page:
1/6
Meaning:-
A contribution plans is easy and manageable as
the calculation of the obligation that needs to be
settled will be based on the amount that had to
be paid to the scheme for that specific period.
The contribution amount can be calculated
based on the usage of the employee
compensation formula. No actuarial
assumptions are required in calculating the
obligation and nor are the actuarial gains or
losses required. The employer will recognize
the contribution payable at the end of the period
based on the service of the employee within
that particular period. That amount will be
deducted by any payments made to the
employee within that period. Any excess
payments will be considered as prepayments
and will be deducted from the future
contributions or the employee may even get a
refund of funds for the same.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/6
Benefits of Contribution Plans for the
Employees:-
Portability: Contribution plans are highly
portable as they will be paid directly into the
accounts of the employees. It will allow the
employees to simply take their accumulated
funds when they shift from one job to
another.
Immediate Vesting: In most of the
contribution plans, the contributions made
by the employer to the employee’s account
will soon be considered as the property of
the employee so that the employees can gain
full benefit from the contribution plan upon
retirement or resignation.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/6

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 6 pages?
Access Now
Unformatted Attachment Preview
Meaning:A contribution plans is easy and manageable as the calculation of the obligation that needs to be settled will be based on the amount that had to be paid to the scheme for that specific period. The contribution amount can be calculated based on the usage of the employee compensation formula. No actuarial assumptions are required in calculating the obligation and nor are the actuarial gains or losses required. The employer will recognize the contribution payable at the end of the period based on the service of the employee within that particular period. That amount will be deducted by any payments made to the employee within that period. Any excess payments will be considered as prepayments and will be deducted from the future contributions or the employee may even get a refund of funds for the same. Benefits of Contribution Plans for the Employees:• • Portability: Contribution plans are highly portable as they will be paid directly into the accounts of the employees. It will allow the employees to simply take their accumulated funds when they shift from one job to another. Immediate Vesting: In most of the contribution plans, the contributions made by the employer to the employee’s account will soon be considered as the property of the employee so that the employees can gain full benefit from the contribution plan upon retirement or resignation. • • Personal Control: In contribution plans, the funds will be directly credited to the accounts of the em ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
Awesome! Perfect study aid.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Documents