Defined Benefits And Defined Contribution

Defined Benefits And Defined Contribution

DEFINED BENEFITS AND DEFINED CONTRIBUTION
These are two major ways in which retirement benefits are received. The nature of the benefits will also impact the way in which the planning process is conducted. The benefits at the time of retirement can come either through defined benefits or the route of defined contributions. Each method has its own characteristics and hence has to be understood and dealt with in their own manner.

It is necessary that one is clear about the various benefits and the heads they fall under because this will determine their features. Depending on the nature of these routes different kinds of amounts will be available for the individual and due to this the details of this area has to be carefully looked at.

DEFINED BENEFITS
The name of the plan suggests its main features. Defined benefit plans are those where the benefit provided to an individual after retirement is known. This means that the route for calculating the benefit is clearly defined at the starting point itself. Any person who becomes eligible for the benefit will be able to make the calculations and arrive at the figure.

These plans are beneficial because here the person knows the exact calculation based upon which the amount will be received. It is the duty of the employer to pay out the required sum at the appropriate time. The onus thus shifts from the receiver to the provider of the benefit. Employees thus would prefer to invest in such plans because they provide them assurance about the amount that they will be receiving at the time of retirement.

DEFINED CONTRIBUTION
Defined contribution is another method in implementation in this area. The features of this route are different from what the defined benefit method seeks to give. This method is finding increasing acceptance across the world by various companies as well as governments.

Pros and Cons of Investing in Stocks

Pros and Cons of Investing in Stocks

Investing Stocks Market Trading
Investing in stocks means owning a share of the company. This gives ownership rights and shareholders have right to vote....
Read More
Today’s Stocks Market Updates (06 October 2022)

Today’s Stocks Market Updates (06 October 2022)

Market Update Stocks Market
VALUATIONS SENSEX PE Ratio 25.09 NIFTY PE Ratio 20.93 Source: NSE and BSE BSE SENSEX58222.10      +156.63     +0.27%NIFTY 5017331.80         +57.50     +0.33%NIFTY...
Read More
What is Exit Load in Mutual Fund?

What is Exit Load in Mutual Fund?

Investing Mutual Funds
If you are someone wanting to start off an investment journey, you will come across people suggesting you to go...
Read More
Today’s Stocks Market Updates (04 October 2022)

Today’s Stocks Market Updates (04 October 2022)

Market Update Stocks Market
VALUATIONS SENSEX PE Ratio 22.47 NIFTY PE Ratio 20.86 Source: NSE and BSE BSE SENSEX58065.47      +1276.66     +2.25%NIFTY 5017274.30        +387.00     +2.29%NIFTY Bank39110.10  ...
Read More
Today’s Stocks Market Updates (03 October 2022)

Today’s Stocks Market Updates (03 October 2022)

Market Update Stocks Market
VALUATIONS SENSEX PE Ratio 21.90 NIFTY PE Ratio 20.39 Source: NSE and BSE BSE SENSEX56788.81       -638.11     -1.11%NIFTY 5016887.30        -207.00     -1.21%NIFTY Bank38029.70  ...
Read More
What are Hedge Funds?

What are Hedge Funds?

Investing Mutual Funds
Hedge funds are still in their early stages and are not as well known as other types of mutual funds....
Read More
Today’s Stocks Market Updates (30 September 2022)

Today’s Stocks Market Updates (30 September 2022)

Market Update Stocks Market
VALUATIONS SENSEX PE Ratio 22.25 NIFTY PE Ratio 20.64 Source: NSE and BSE BSE SENSEX57426.92       +1016.96     +1.80%NIFTY 5017094.30        +276.20     +1.64%NIFTY Bank38631.90  ...
Read More
Today’s Stocks Market Updates (29 September 2022)

Today’s Stocks Market Updates (29 September 2022)

Market Update Stocks Market
VALUATIONS SENSEX PE Ratio 21.79 NIFTY PE Ratio 20.08 Source: NSE and BSE BSE SENSEX56409.96       -188.32     -0.33%NIFTY 5016818.10        -40.50     -0.24%NIFTY Bank37647.80  ...
Read More
Is SIP Safe?

Is SIP Safe?

Investing Mutual Funds SIP
A Systematic Investment Plan, popularly known as SIP, means a facility offered by mutual fund companies to investors. This type...
Read More
1 2 3 19