A. What arethe importantfactors thatshould be consideredbytertiary sector employees whenthey are deciding whetherto place their superannuation contributions in the Defined Benefit Planor the...

Superannuation contribution plans:
For the future security of the workers at the retirement time, superannuation or
etirement plan are available. It encourages individuals to save money and invest for
their future especially for their retirement time. Big countries mostly proactively look into
this factors that employee and employer are contributing towards these plans or not.
Superannuation plans are basically invested in two types of Plan.
 Defined Benefit Plan
 Investment choice Plan
1) Defined Benefit Plan: Defined benefit plans are those plans where future benefit
has already defined and promised by the employer to employee for certain
amount at the time of retirement. Future values of benefit are determined by the
formula and different factors. On the behalf of the employee, employers
contribute on these plans and also give some contribution from organization side
and trustee of these plan ensure that the asset value should match the
obligations of the employers. Over the value on these assets are enjoyed by the
trust.
2) Investment Choice Plan: In investment choice plan, employees keep an
individual savings account included of employer funded. Under this plan
employee can chose the type of assets where he/she want invest his/her
superannuation funds, There are four types of investment strategies:
i) Secure fund: These funds for conservative approach investors and these
funds invested in fixed interest rate securities and cash.
ii) Stable Fund: These funds for the little moderate risk appetite investors whose
fund is invested in the Fixed interest rate and bond securities and have a very
small exposure in international and domestic securities.
iii) Trustee Selection Funds: They are balanced fund for domestic and
international equities and different assets.
iv) Shares Fund: These funds for Advanced Aggressive investors who want to
growth their investment and it is invested in the domestic and international
equities.
Factors involve in the choice between Defined benefit plan and Investment
choice plan:
There are many factors involve in the choosing plan between both type of
investment type:
1) Age of the worker.
2) Retirement Goals of the employee
3) Time horizon of the investment
4) Number of dependent of the worker
5) Health condition and family health conditions of the employee.
6) Risk Appetite of the employee
7) Economy condition of the country
1) Age of the worker: It is very important factor for make choice between Defined
Benefit Plan and Investment choice plan. If the worker is younger age about the
25 to 30 or 20 to 25 than he would have approximately 3 decades of time for
etirement. So in this case in long term he could take advanced aggressively plan
from the Investment choice plan and with the time horizon risk involved in the
equities would mitigate from time. In Long term horizon equities gives best return
for the investors. If the workers are little elder like , 30 to 35 or 35 to 45, then he
would have a less time period for retirement and also highly risk involve in the
shares or same kind of investment. In this case investor can choose Defined
enefit plan or use conservative approach on the investment choice plan. As per
the cu
ent age worker can choose the plan for superannuation.
2) Retirement Goals: What are the goals of the individual also consider while
taking the decision for the different plans. There could be possible that worker
could have world tour goal after retirement, Higher educations of the children at
the time of retirement, Worker could want its own house...