MTHEL131 Lecture Notes - Lecture 9: Pension, Old Age Security, Life Insurance
31 Mar 2016
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Document Summary
2 broad types: employer/private sector pensions, government pensions. Pensions you own from working with an employer. 2 types: deined beneit pension plan, deined contribution pension plan. The beneit/monthly payment at retirement is deined by a formula: Years of service x income x pension factor. Years of service: number of years person worked at company. Income: size of pension is a factor of income. Calculated in 3 ways: career average, average of best 3 years, average of last 3 years. Will be stated clearly which approach to use. Pension factor: deined as the generosity of employer ex: 1%, 1. 5%, 2% Ex: bob is 60, worked at a company for 30 years and is looking to retire. Bob started working at k a year at the age of 30, and income grew steadily to k at the age of 55. During his last 5 years, bob took another position and was paid k.
