Retirement Plan refers to a pension which you get upon retirement. As a result, a pension is a provision for people with income when they are no longer in employment. Plans for retirement can be set up by insurance companies, institutions like trade unions or employer associations, employers, and the government.
Most of the retirement plans are in the form of a guaranteed annuity. Employer or occupational pension is created for the employees benefits by the employer. These plans are very helpful to you as well as your employer because of tax reasons as it is a form of deferred compensation.
Many plans have an insurance aspect as they pay benefits to disabled beneficiaries or survivors. There are various types of retirement plans such as employment-based, social / state, and disability. In most of the employment based plan, both the employee and employer contribute money to a fund while in employment. In the US, social or state plans include the Social Security. In disability plans, if you suffer a disability, you can make an early retirement.
Retirement plans are available as defined contribution plans or defined benefit plans. In defined benefit plan, you get a fixed payout at retirement calculated at a fixed formula depending on your salary and the years in membership. Example of this is the Social Security. In defined contribution ones, contributions are paid into your individual account. Examples of this plan are the Individual Retirement Accounts (IRAs) and 401 (k).
There are various financial institutions providing retirement plans such as :
- AIG Retirement Plan
- Prudential Retirement Plan
- Hartford Retirement Plan
- Wells Fargo Retirement Plan
- Vanguard Retirement Plan
- ING Retirement Plan
- Great West Retirement Plan