FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Client 1

The Pension Plan is an instrument for channeling long term savings in order to see, mainly, at the time of retirement, private pensions to supplement public. The pension plan is another pillar of the retirement planning. This is a voluntary special service of the employer. A company pension offer especially large companies with many employees. But, the trend has already been lost. In time, as discussed above in which high-wage labor costs, and voluntary services in the private sector are rare.

That does not mean that you are exposed to the mercy of the employer. The commitment by the employer to pay a pension is binding. However, it is possible that agreed for newcomers in a company no longer operating pension. In this case, it is especially recommended, for example by the fund from the state to make additional private pension. Incidentally, the company pension scheme by government allowances or exemption under the retirement pension plan should be encouraged.

Private pension plans differ from government pension plans because the benefits from these defined contribution plans are based on contributions. They do not promise a guaranteed income like defined benefit plans. Individual retirement accounts, 401ks, simplified employee pensions (SEPs), annuities and other investment options qualify as private pension plans. Some are initiated by an individual planning for his retirement. The plan depends solely on his contributions for determining a benefit payout. But private employer pension plans often have contributions by both the employee and the employer, with varying levels of participation possible for both parties. Any pension payment due you from a private pension plan will be in addition to whatever Social Security income you have earned at retirement (LaCour-Little, et.al, 1999, pp. 88-96).

In case of Malcolm, who has been working for the company since 27 years would be eligible for Pension after he get retires at an age of 65. Currently his age is 50. Amount in £

Income Per Anum

55,000

Total Working Years

27

Working Years by the end of Retirement

42

Total Income Earned at Retirement

2,310,000

Pension Income (1/80)

28,875

Lum Sum Amount (3/80)

866,250

Malcolm will get a pension of £28,875 when he retires at the age of 65. Government is also planning to increase the retirement age. If the retirement age increases, than Malcolm would get a far greater amount and would be benefited from the situation.

Malcolm and his wife have invested their saved amount in Shares and Cash instruments. Since Malcolm is moving towards retirement age, he must focus on investing in safer avenues of investment in which they will get regular income at fixed or stable rate. They could invest in bonds, or other money market instruments according to their risk appetite. However at this stage they must avoid investment in shares or keep the investment to a very low level in the shares. In this way, they could also avoid capital gain tax.

Client 2

Buying or owning a home offers great advantages to an ...