Additional voluntary contributions (AVCs) are contributions that employees can make at their discretion to increase the benefits available from their pension fund upon retirement. These contributions can go into an employer's scheme or a scheme of the employee's choice.
Allocated benefits refer to the payments in a defined-benefit pension plan, where benefits are distributed to participants as premiums are received by the insurance company. This ensures that employees are guaranteed a pension at retirement, even if the firm ceases operations.
A DB Scheme, or Defined-Benefit Pension Scheme, promises a specified pension payment, lump-sum, or combination thereof on retirement that is predetermined by a formula based on the employee's earnings history, tenure of service, and age.
Deferred benefits and payments refer to financial arrangements where the receipt of money, benefits, or income is delayed into a future time period, often as part of retirement or other long-term financial planning strategies.
A Deferred Compensation Plan is a financial arrangement in which a portion of an executive's current earnings is deferred until retirement or a specified future date.
A defined-benefit pension plan promises to pay a specified amount to each person who retires after a set number of years of service. These plans pay no taxes on their investment income.
The Employee Retirement Income Security Act (ERISA) of 1974 governs most private pension and benefit plans, easing pension eligibility rules, establishing the Pension Benefit Guaranty Corporation (PBGC), and setting guidelines for managing pension funds.
An occupational pension scheme where the retirement benefits are calculated based on the employee's final salary prior to retirement. It is a type of defined-benefit pension scheme.
Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits. It varies depending on the year of birth, and understanding this concept is crucial for effective retirement planning.
The age at which a Social Security beneficiary can receive full Social Security retirement benefits. It is defined by the Social Security Act of 1935 and its amendments, particularly the 1983 amendment which adjusted full retirement ages based on date of birth.
A funded pension plan is a type of retirement plan where funds are currently allocated to purchase future retirement benefits, ensuring that employees receive retirement payments even if the employer is no longer in business at the time of retirement.
Gross Income refers to the total earnings from all sources before any deductions or taxes. It encompasses income from employment, self-employment, rental property, alimony, child support, public assistance payments, and retirement benefits.
A payment of the entire amount of retirement benefits due at one time rather than in installments.
A non-contributory pension scheme is an occupational pension scheme in which all the contributions are made by the employer, enabling employees to receive retirement benefits without having to make any contributions themselves.
A noncontributory qualified pension or profit-sharing plan (NQP/PSP) is a retirement plan entirely funded by the employer, with no contributions required from the employees. These plans are established for the employees' benefit, ensuring financial security upon retirement.
Past service credit refers to the recognition of service time an employee has accrued prior to being a member of a pension plan, which is used to determine pension benefits.
Past Service Liability refers to the obligations to fund an employee's benefits in a pension plan for their prior service before entering into the pension plan. It is a crucial element in pension planning and impacts the financing of future benefits.
PBGC Guaranteed Benefits refer to the portion of pension benefits that are guaranteed by the Pension Benefit Guaranty Corporation (PBGC) in the event that the pension plan sponsor defaults.
A Pension Equity Plan (PEP) is a type of defined-benefit pension plan design in which a participant's benefit is stated as a lump sum based on the participant's age, service, and average pay, with the average pay usually based on only the final few years of employment.
A Pension Freeze refers to the situation when a pension plan sponsor decides to eliminate future pension accruals for plan participants, although the plan itself remains in existence to pay out already accrued pensions.
Benefits provided by an employer to former employees, typically those who have retired. The accounting treatment for these benefits, including health care and pensions, varies based on whether they are part of a defined-contribution or defined-benefit pension scheme.
Prior service cost refers to the obligations a company incurs for employee benefits under a pension plan related to service provided by the employee before a specific date.
The Railroad Retirement Act, a congressional act effective from 1935, provides retirement benefits to retired railroad workers and their families from a dedicated fund separate from the Social Security fund.
Retirement age is the designated age at which an individual becomes eligible to retire and begin receiving retirement benefits. This can include several variations such as normal, early, deferred, and automatic retirement.
Social Security credits determine a person's eligibility for Social Security programs. Credits are earned by working in a covered job and by paying Social Security taxes.
The entitlement of a pension plan participant to receive full benefits upon reaching the normal retirement age or a reduced benefit upon early retirement, regardless of their employment status with the same employer.
