Benefits And Benefits Of The Pension Plan

3374 WordsApr 16, 201514 Pages
Abstract The purpose of this paper is to acknowledge and discuss the various types of postretirement benefits. The pension plan is the most well known type of postretirement benefit plan but it is not the only one. This paper addresses the other types of benefit plans and identifies some of the major similarities and differences between these plans and the pension plan. The paper also goes in-depth on the Financial Accounting Standards Board statement about postretirement benefits other than pensions. Although this statement was released 25 years ago, the rules and regulations put forth still hold relevance today. The research conducted to write this paper was done with references from two major sources. The first source is the 6th edition…show more content…
Employee retirement plans are of the most common types of employer benefits offered in the workplace. Retirement plans aim to attract and retain the most knowledgeable and skillful employees in the industry throughout their career. While retirement plans help companies hold onto their valued employees, this type of benefit is a continuous and costly expense for any business. Retirement plans are not only expensive to maintain, but they require an exorbitant amount of time and money to correctly project. Retirement plans call for the needs of expert mathematicians and forecasters known as actuaries. “Actuaries use statistical methods to estimate the defined benefit plan obligation and annual funding. Assumptions must be made about length of service, return on assets, life expectancy, and salaries at retirement. These assumptions are called actuarial assumptions.” The role of the actuary is required to determine how much money is necessary to go into the retirement fund annually in order to maintain enough funds to pay retirees in the future. This process is extremely complex; it requires constant analysis of the present value of money in comparison to future value; it also analyzes how long retirees will live after collecting their benefits as well as how long they will work for the company and what their ending salary will be. The goal of retirement
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