A Brief Note On Pension And Pension Liability

847 Words Sep 14th, 2015 4 Pages
Pension vs Pension Liability
A pension is an amount of money that a business or government uses to make payments to its retirees.
The company usually doesn 't pay pension benefits directly, rather it buys an annuity which converts a fixed amount of money into a lifetime of annual payments for the retiree. However, investing in it can be tricky. The amount to which a guarantee is based on, changes over the years.

When the stock market takes a decline, the investment can too which means less money for all concerned creating what is called a pension liability. A pension liability is considered to be the difference of the amount that 's due and the amount of money that is actually available. The liability happens in a traditional DB scheme or a Defined Benefit scheme such as a matching fund that guarantees a certain amount of retirement income.

When the government or other agencies use money that was meant for pensions for other reasons, and don 't replace the funds, this could create a pension deficit or liability. Another way in which a deficiency may occur is to have thousands of people retire or laid off at the same time.

Pensions in the UK
For some time now, the UK pension fund has been under the scope. The pension fund operates on a collection of earnings or component of earnings. It 's very much a part of the UK 's economic position and lately, its disruption. It 's important to Russia and other sizable European markets mainly due to the returns of the…

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