3 ms·
The parent is referring to a pension plan, which is generally guaranteed income for life after a certain amount of service. If you leave or are fired prior to t
by pbk1 6y ago
The parent is referring to a pension plan, which is generally guaranteed income for life after a certain amount of service. If you leave or are fired prior to the service requirement, you could lose all or part of the pension. Just want to note in the US these are usually offered to public sector workers - e.g. teachers, firemen, police, military, civil servants. I don't know of a private company that still offers pensions.
Separately we have retirement savings programs (usually called a 401k) that are offered by private sector employers, often with a match. Employees can invest a percentage of their paycheck in the program, and companies will match that contribution to a certain level to incentivize savings. When you leave the company you can keep the account or roll it somewhere else. Unfortunately these contributions are capped by federal law at no more than $19,500 per year per person. There are tax benefits to the 401k - you can choose to pay tax on the contribution when you make it and pay no income tax on those funds in retirement, or not pay tax now and pay income tax in the future. This is a lot better than investing in a taxable brokerage account, because you get taxed on the income as well as the securities.
- stephenr 6y agoRight. That clarifies things a bit. The only "pension" I've seen in Australia (and apparently UK, as my father's situation implies) is a fairly minimal "pension" payment to all retired citizens, and then huge incentives for people to pay into their own "Super" (short for Superannuation) plan, which is fairly similar to your 401K it seems - but they actively encourage paying more into it. Is the cap on any payment into the 401K or just the employer's contribution? I've not heard of nor experienced anything similar to the 'pension plan' concept you have, and my first job was in State Government, from whence I still have a Super plan... somewhere.
- adventured 6y agoHow does Australia handle retirement pay for members of the military?
- stephenr 6y agoI've never been in the military so I don't know from personal experience, but when I had a government job, I just had a Super plan like everyone else.
- greenyoda 6y ago> a fairly minimal "pension" payment to all retired citizens The U.S. version of that is "Social Security" (which is funded by a payroll tax). > Is the cap on any payment into the 401K or just the employer's contribution? Yes, the maximum amount an employee can contribute yearly is limited by law. (You can make additional "catch-up" contributions if you're aged 50 years or older, which are also limited by law.)
- stephenr 6y agoHuh. Australia used to have “social security” (it’s now referred to as the cryptic “Centrelink”), but I thought it was essentially only unemployment/disability payments, and specifically not pension payments. Does the US S/S cover unemployment benefits as well as those who are retired? Re:401k wow. I cannot fathom a government preventing its citizens from saving more money for retirement. Seems bonkers to me.
- greenyoda 6y ago> Does the US S/S cover unemployment benefits as well as those who are retired? No. Unemployment benefits are a separate program, run by the individual state governments. (Social Security is run by the Federal government.) > Re:401k wow. I cannot fathom a government preventing its citizens from saving more money for retirement. You can save as much as you like for retirement outside of your 401k. The limit on the 401k only puts a cap on how much you can save in tax-deferred accounts.
- byoung2 6y agoYes she has a 401k so she can take that with her, as well as IRA accounts we have privately with our bank, but at 20 years she gets a huge pension from her employer, which is a large health insurance company that operates hospitals (Kaiser Permantente).