COMMERCE 2FA3 Chapter Notes - Chapter 7: Interest Rate Risk, Tax Shelter, Procrastination
6 Apr 2017
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Chapter 7: personal finance and saving for retirement. The most important decisions that individuals have to make in the context of finance centre on saving and investing for retirement. Retirement income in canada is built in three pillars: government-administered programs, various kinds of company pensions, and personal saving (whether tax sheltered through. Government-administered programs are not sufficient for providing comfortable retirement, thus company pensions and personal saving are important. There are two kinds of company pension plans. Defined benefit (db): benefit payments are made to retirees according to a formula. Companies that offer such pensions have fiduciary responsibility to set aside in a dedicated pension fund an amount sufficient to pay future retirees what they have been promised. These funds are reinvested to reduce risk and also in hopes of increasing returns ensuring the pensions will be paid. These plans are referred to as legacy plans are they are a thing of the past.
