Retirement Plan

A retirement plan refers to the arrangement made to provide employees with some kind of income or pension during their retirement. This plan will provide employees some income when they no longer earn from their employment. At the absence of an active source of income this retirement plan generally provides helping hand.

They are offered by employers themselves or insurance companies, government or other institutions like employer associations, trade unions etc They are popularly known as pension schemes in several countries. In Australia, it is called as Superannuation plans.

They are classified into defined benefit and defined contribution depending upon the benefits. A defined benefit generally vouches for a payout during retirement. It is according to a fixed formula which is determined by the salary and number of year's of the membership plan. On the other hand, a defined contribution will offer payout only during the retirement of the member.

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