PENSION

Trust for Pension schemes



Trust for Pension Schemes

Introduction

The topic over here covers the aspect of trust in the pension plans. The pension plans are offered every where in the world. The main concept behind the pention funds is to give a steadily fixed income to those people who have been retired from their job. It is the regulation that is set up by the federal state of every government. For all the companies, private or public, it is mandatory to have pension funds program. In the pension program, a small amount of salary is deducted from the individual and goes into the pension fund which accumulates every month (Davis 2000, 219-225). When ever, the individual reitres from the company, his or her allocated and accumulated provident funds are transferred to them. There are two options for providing the pension funds, one is that in which the individual is given the whole sum amount once, while the other disbursement of pension funds is done on monthly basis. This serves as a fixed income for the reitired individuals. The question which arises is that is the pension funds are worth enough ot trust or not. In the discussion done below, we are going to evaluate the benefits of having pension funds program and what are the possible risks that are involved in the pension funds. (Davis, 1995, 263-274).

Discussion

This system is inexpensive for the public finances, but it is a source of poverty and inequalities, especially between 40% of employees who receive company pensions to defined benefit and others. Public pensions are a little over 5% of GDP. The UK is the only country in Europe to provide a slight decline in the share of pensions in GDP over the next 50 years, despite the increase in the share of pensioners in the population. The government promotes a growing reliance on private savings: its purpose is to increase the share of public pensions by 60% of retirement income today to 40% in half a century (Francis, 2003, 98-109).

The aim of the reforms of New Labour is to provide decent public pensions to employees' low income. Declining public pensions for employees at medium and high income improving the regulation of pension funds would encourage the increased savings private (Rajnes, 2002, 54-61). Unfortunately, the devices of private pensions have experienced great difficulties in recent years, and trust in this type of plan has been significantly eroded. British households are not saving enough to ensure a decent standard of living in retirement. And companies are withdrawing the pension problem (Clayton and Ponthusson 1998, 67-98).

Benefits of Trusting the Pension Schemes

I think it is interesting to form a solid stock portfolio long term to have a pension plan. The main advantages I find in the portfolio are:

The portfolio produces a regular income: The income can be used with complete flexibility to buy more shares for the portfolio, destine for consumption, use it to pay the mortgage on your property, ...