Question

Respond to the following in a minimum of 175 words:

• Discuss the role that pension funds play in company pension plans.
• What benefits accrue to companies who elect to use pension funds?
• How does the use of a pension fund change the accounting that must be done with respect to employee pension amounts?

Answer 1

Answer:

Pension Fund:

It is a pooled financial contributions of individuals. This is one of the biggest investment bocks. This collects cash of various annuity or pension plans and put them into various asset class and markets to generate significant returns.

Benefits Plan:

These are the retirement plans gave by the organizations. Benefits plan functions as speculation and insurance cover for individuals after their retirement. This is given by employer to its representatives in which workers need to pay a specific sum till a specific time to get benefits after the retirement.

Role of pension fund in pension plans:

Pension fund is a pooled financial contribution from annuity plan set up by businesses or different associations. Cash in pension fund originates from annuity/pension plan.

Advantages of pension fund for the organizations:

Pension finance pools cash of individuals who plan their retirement, they get income after the retirement. Organizations give pension plan to its representatives in order to make sure about their future, organizations get fulfilled workers while giving annuity plans. Workers' retention rate is likewise expanding in the organizations those give better annuity plans.

Pension accounting:

Companies use accural premise of accounting rather than money premise. Reasonable estimation of assets and liabilities is resolved toward the year's end.