Challenges Of Pension Incomes

On August 17, 2006 the Pension Protection Act of 2006 (the Act) was signed into law. The Pension Protection Act ("PPA") [P.L. 109-280] originated as a single-employer defined benefit pension funding reform bill to strengthen the DB pension system. However, it is best known for the number of provisions to enhance 401(k) and 403(k) plans, especially the auto enrollment feature. Among other noteworthy provisions are those intended to remove legal obstacles to, and create new incentives for, automatic enrollment 401(k) and 403(b) plans. It represents one of the most comprehensive pension reform legislation since ERISA was enacted in 1974. The Act has lead to many companies changing the way their plans are designed and administered, amend plan documents, increase plan funding, and make additional plan disclosures in regulatory filings and to plan participants. The Act made many sweeping changes but for the sake of brevity, only the automatic enrollment plan made by employers on the behalf of its employees is addressed in this report as to the rationale behind the passage of the PPA. Even though the provisions generally apply both to 401(k) and 403(b) plans, for explanatory purposes all references will refer only to 401(k) plans.

Envision feeling cold, starved, petrified, and alone, just getting home to find an eviction notice, perhaps a letter of foreclosure hanging from the door. As the room goes grey and begins to spin, four words begin to echo in the background, “Is this really happening?” All resources are exhausted and Social Security proves ineffective. Fear has taken over. Thoughts of life in a shelter cloud the room. The bills are piling high, as bank accounts begin to dwindle. Unfortunately, this is the harsh certainty of many people in the aging community. Retirement is a critical life event that everyone has to undergo, through being unprepared, many fall victim to poverty in old age. Individuals should utilize Individual Retirement Accounts,

There’s a lot of discussion in the news about how underfunded many public pensions are around the country. States like Alabama, Michigan, Illinois, and Arizona are in the news for high, pension plan debt that are eating away city and state budgets. But, the public sector isn’t alone in underfunding pensions. Not all private pensions are the money in the bank that employees think they are, in fact they are doing about the same as public pensions. Neither is 100 percent funded. The result?-A combined deficit in retirement plan savings of over $4 trillion for payees between the ages of 25 and 64.

In this chapter, one will learn that affluent parents and grandparents, are not as frugal when it comes to buying gifts for their children or grandchildren. As this chapter includes a lot of graphs, it includes an interesting static. From 1996-2005, they learned that parents and or grandparents will give adult children over $1 trillion dollars. “Gifts” do not always have to be in money form, they can be land, homes, cars, etc. One will also learn that many people that have healthcare insurance, most of the time does not cover dental and healthcare visits fully. Many will also learn that, affluent people enjoy vacations. It was shown in this chapter, that more than 55% spend over 5,000 dollars.

The old private pension system was created in the 1920’s and expanded throughout the 30’s and 40’s (McDonnell). Private pensions were considered one of the three income sources for retired elderly. Originally, private pensions had defined benefits. The employer and employee would agree to a percentage of salary that the employee would receive from the company annually during retirement. Contractually obligated, this placed the liability onto the employer. Estimates say that employees could receive around 40% of their last year’s salary as annual income with defined benefits. In the 1990’s, the pension plans gradually changed from defined benefits to defined contribution. The employees, rather than negotiating retirement salary now determine the amount of their salary that will be saved in a retirement fund. Retirement income is a burden on the employee rather than employer (Ghilarducci 8). In order to equal the income of the old plans, employees give their retirement savings to mutual funds that invest in the stock market. While a key aspect of retirement, the system has evolved like most economic institutions, favoring the wealthy and established. Furthermore, the private pension system contributes to a market bubble, putting money into the stock market regardless of market strength. These two problems cause the modern pension system to be flawed and unstable. The program must undergo drastic reform in order to save private pensions.

A pension / income stream is simply a product which offers an individual entitlement to a regular income stream each year, in exchange for a payment of capital. They are governed by the Superannuation Industry Supervision (SIS) Act as they are the commutation / drawdown phase of Superannuation.

After carefully reading the essay by John Verdant entitled, "The Ables vs. the Binges", I was able to develop a sense of shared vision through the depiction of two families having the same income with very different behaviors and spending habits. Many of us have agreed that habits die hard and an extensive amount of time is required before individuals will see the error of their ways. In this particular case, the author makes a thorough comparison between the Binge family and the Able family. According to Verdant's statement, "The Able family maintains a "wish list" of things that they decide they need in their home. Often the items on the list are crossed off as a substitute is found or a different way of doing things is discovered..."(Verdant,

In the book “All Money in the World” by Laura Vanderkam discusses about ways that people get and spend money in their lives and the relative between money and happiness. Each title, the author shows us different ways to use and earn money like getting, spending and sharing. But in chapter 3, “Rethink Retirement” of getting, Laura Vanderkam shows the creative way to approach retirement. There are three of the ways that the author suggests people can rethink and plan for retirement such as saving, making extra, and using time efficiently.

In today’s economics it is hard to balance work, family and the bills to maintain a mundane lifestyle. There is a

In the past, people retired at the age of 65, relying on their social security to sustain them. However, this has to change base on the uncertainty of the economy. It is believed that by 2016, there will be more man and women over age 65 still working (Hayutin 2010). Saving for their housing and health will be the challenging aspects. Despite all these suggestion to improve the life of the elderly, there are still some challenges that can be a hindrance to their care

My thoughts of the PBS special are unfairness and immoral doings. To think when I retire, I will not be able to live up to my standard of living is very unfair. I find it hard to believe that corporations will put the weight of creating pension plans on working class people. I understand that many corporations or companies may cut down on retirement and pension plans to save money, but it is unfair to employees that have worked for their company for several years. Thus, retiring should be a smooth transition from the work life, not a stressful one. According to the United Airlines bankruptcy segment, United Airlines made the right decision to cut cost due to their bankruptcy, but I feel that they could have used other monies beside credit to

With the widespread of equality and diversity features in organizations, gender balance should be obvious in work place. However, in reality, female in management levels still remains as minority in most of the organizations. The article will start from the UK Pension system and EO policies studies to explain the basic situation for work life, then focus on the reason why equality and diversity haven’t been able to achieve their target to solve the gender issue. Further more, there will be a discussion about how to resolve the issue and suggestions will be made. Effort needs to be made to further develop the policies in work place to make an equal, diverse and gender balance atmosphere.

Global retirement income systems are stretched to the limit these days. People on the verge of retiring are worse off than those who retired a decade earlier due to the rising cost of purchasing an annual flow of future income in most jurisdictions around the world. According to Glenn Stevens, governor of Reserve Bank in Australia, the global retirement income system is under a lot of pressure, and the problem “must be acute” in Europe, where sovereign yields in some countries are negative for significant durations. Mr. Steven’s went on to say, "How will an adequate flow of income be generated for the retired community in the future, in a world in which long-term nominal returns on low-risk assets are so low?" According to Mr. Stevens, “they have to accept a lot more risk to generate the expected flow of future income they want," he warned.

Single income traditional families have to have constant vigilance of their finances, but the family’s rationale for this inconvenience outweighs the negative aspect of this lifestyle.

The survey also demonstrates that the people with Defined Contribution (DC) or group RRSP pension plans will have enough income to maintain equal spending patterns in retirement as before. The survey used for the data assumes the retirees will have similar spending habits in the future and it is highly possible that the future generation of retirees might spend more and have higher income needs as a result.