Chat with AI
Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney
Edition 10ISBN: 9780073377421Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney
Edition 10ISBN: 9780073377421 Exercise 2
Why have private pension plans grown so rapidly since the 1940s?
Explanation
Verified
Verified
Retirement plans refers to plans formulated for investment that involves contribution from both employer and the employee in order to secure the employee's future and provide with a regular income from the accumulated fund during retirement to meet their daily expenses.
Retirement phase consists of various economic problems which affect an individual's living and in order to overcome them, savings and investment should be started from an early age of earning so as to accumulate adequate wealth to live life peacefully after retirement.
Retirement plan serves advantageous for both employers and the employees in various ways. The reason of increasing focus on private retirement plans since 1940s i.e. during World War II are such advantages which are as follows-
1. Increased productivity.
A retirement plan contribution by an employer for the future income of employee automatically brings a motivation in the employee to work harder for the increased efficiency and profit of the company. This increased productivity directly affects the employer's income thus encouraging retirement plan contribution to a greater extent.
2. Tax Consideration
Retirement plan brings tax benefits for the employees thus encouraging them to opt it. The contribution made by the employer in a retirement plan is not subject to tax until the money is accumulated to employers when as well the taxes are quite low thus adding to the benefit of the employees.
3. Wage stabilization Union Benefits
During the World War II, cash wages were highly in practice. This wages were not very much higher also the benefits available to them through social security was not adequate so, in order to build a pressure on the employer to increase the wage rates, the union demanded establishing of employer's private retirement plan.
4. Business Necessity
Retirement plan started becoming a part of employer's compensation programme making it basic necessity and a competitive advantage for each employer.
5. Efficiency
It brings increased awareness among individuals to save for their retirement. Apart from this, those who are unable to understand the seriousness of savings are somehow forced to take the step and make necessary contribution resulting in an advantage for their retirement.
Thus, the above reasons were most prominent in driving demand for retirement plan by the employers after the World War II i.e. 1940s.
Retirement phase consists of various economic problems which affect an individual's living and in order to overcome them, savings and investment should be started from an early age of earning so as to accumulate adequate wealth to live life peacefully after retirement.
Retirement plan serves advantageous for both employers and the employees in various ways. The reason of increasing focus on private retirement plans since 1940s i.e. during World War II are such advantages which are as follows-
1. Increased productivity.
A retirement plan contribution by an employer for the future income of employee automatically brings a motivation in the employee to work harder for the increased efficiency and profit of the company. This increased productivity directly affects the employer's income thus encouraging retirement plan contribution to a greater extent.
2. Tax Consideration
Retirement plan brings tax benefits for the employees thus encouraging them to opt it. The contribution made by the employer in a retirement plan is not subject to tax until the money is accumulated to employers when as well the taxes are quite low thus adding to the benefit of the employees.
3. Wage stabilization Union Benefits
During the World War II, cash wages were highly in practice. This wages were not very much higher also the benefits available to them through social security was not adequate so, in order to build a pressure on the employer to increase the wage rates, the union demanded establishing of employer's private retirement plan.
4. Business Necessity
Retirement plan started becoming a part of employer's compensation programme making it basic necessity and a competitive advantage for each employer.
5. Efficiency
It brings increased awareness among individuals to save for their retirement. Apart from this, those who are unable to understand the seriousness of savings are somehow forced to take the step and make necessary contribution resulting in an advantage for their retirement.
Thus, the above reasons were most prominent in driving demand for retirement plan by the employers after the World War II i.e. 1940s.
Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
