RETIREMENT PLANS:

Pension plans aim to build retirement corpus and therefore it is very important to know and understand the importance of retirement planning. Retirement planning is the most important goal of every individual and no one can ignore the importance of the same. Improved health facilities have resulted in longer life expectancy. At present life expectancy of an average

Indian is around 66 years and is likely to increase progressively in future. The rising trend of nuclear family with no one to fall back upon has forced people to seriously think about planning for retirement. This has to be addressed carefully at a younger age itself. The government is also concerned about this issue and has launched NPS (National Pension System) which is offering tax sops too. IRDA is also trying to increase awareness for pension plans offered by the life insurance companies. Accordingly IRDA has also revised its guidelines. Pension plans are also commonly known as retirement plans.

Pension schemes offered by the life insurance companies are of two different types. One is deferred annuity plan and other is immediate annuity plan. Deferred annuity or pension schemes are meant to create retirement corpus by depositing some regular income every year. Immediate annuity gives you monthly payment as pension for which you have to deposit lump sum with the life insurance companies. New Pensions plans will be launched as traditional plans, ULIP plans and also as variable insurance plans. It is very important to know the features of the plan you are buying.

As per new norms, pension plans may have insurance cover. It is not mandatory now to have life cover in new pension plans. Insurers may come out with either of the option i.e. with or without life cover. One has to assess the impact of your choice before opting for a particular pension plans. One must also note that there will not be 4.5% annual guarantee in pension plans in new products. So you have to check what returns your pension plan will give if you continue till the end and also evaluate whether the same will be sufficient to meet your post retirement expenses or not.

Partial withdrawals are not allowed as per new norms and also at the end you have to mandatorily buy annuity from the corpus accumulated. You will be allowed to commute only 1/3rd of the corpus and from the balance you need to buy compulsory annuity from the same insurer with whom you have accumulated your retirement corpus. Previously policy holders were allowed to buy their annuity from any insurer who is offering good deal. Now you have to stick to the same insurer whether your insurer is offering you most competitive rate of annuity or not. Presently pensions plans are allowed as deduction u/s 80-C up to 1 lakh in line with life insurance premium. One must take investment decision after knowing and understanding all the features of the product and take informed decision. Retirement is one of the most important goals of any individual so one need to be extra careful while investing for rainy days.

TYPES OF RETIREMENT PLANS:

Among the different types of retirement plans, there are government-sponsored plans, personal plans, annuities, and employer-sponsored plans: Government-sponsored Plans: The largest government-sponsored retirement plan is the Social Security plan. Personal Plans: The most popular example is the Individual Retirement Agreement or IRA, which can come in different types according to their tax treatment. Annuities: These are contracts established with an insurance company; there are fixed and variable annuities. Employer-sponsored Plans: The two types of employer-sponsored retirement plans are qualified and non-qualified retirement plans. Qualified retirement plans meet the Internal Revenue Code requirements and the Employee Retirement Income Security Act of 1974 (ERISA) requirements. These plans offer several tax benefits: they allow employers to deduct annual allowable contributions for each participant; contributions and earnings on those contributions are tax-deferred until withdrawn for each participant; and some of the taxes can be

deferred even further through a transfer into a different type of IRA. Non-qualified retirement plans are those plans that either does not meet the IRS Code requirements or the ERISA requirements. QUALIFIED PLANS: Defined benefit plans: are company retirement plans, such as pension plans, in which a retired employee receives a specific amount based on salary history and years of service, and in which the employer bears the investment risk. The employee, the employer, or both may make contributions. The maximum amount a participant can contribute each year is the smaller of $160,000 or the average compensations from the three highest consecutive calendar years. These plans are better for people who have 20 years until retirement or less, since the annual contributions can be larger. Pensions : are a type of retirement plan that guarantees a specific amount to be paid out to the employee during retirement. The amount is calculated based on an employee's salary, years of service and a fixed percentage rate. The Pension Benefit Guarantee Corporation (PBGC), a federal agency, covers employer-sponsored pension plans. The insurance covers a monthly maximum amount of about $3,000 for a worker retiring at age 65. Eligibility depends on a company's policy; some companies require service for a certain period of time before an employee can become eligible for a pension plan. If an employee leaves the job, the pension plan stays with the previous employer. Annuities: are defined benefit plans that have fixed monthly payments at the age of retirement. Note that annuities cannot be transferred into an IRA account, so the amount is taxed as regular income the year it is received.

BEST TEN COMPANIES FOR RETIREMENT PLANS:

CHESAPEAKE NATURAL GAS ACER GENENTECH

MICROSOFT (MSFT) AFLAC (AFL) USAA COLGATE- PALMOLIVE MITRE PUBLIX

`1. COLGATE- PALMOLIVE (CL) Headquarters: New York Number of Employees: 38,100 Year founded: 1806 Theyre an old-fashioned company over 200 years old so they do a lot of things differently, Moskowitz said of Colgate-Palmolives retirement plan.

Colgate-Palmolive, which makes everything from toothpaste to deodorant and dog food, offers a plan that bets heavily on the company: They have a savings and investment plan, where employees contribute up to 15 percent of their pay, tax-deferred. Plus, they match 50 percent to 70 percent of the employees contribution up to 6 percent of their salary. If the stock does very well you do very well, Moskowitz said. The company also offers a retiree health-insurance plan, funded completely by the company using preferred stock. Basically, how it works is that when you retire, you can use the money from those shares the company gave you to pay for your health insurance.

And, they pay 100 percent of the costs of a financial-planning course, up to $10,000 a year.

2. MITRE

Headquarters: McLean, Va. Number of Employees: 7,000 Year founded: 1958

MITRE is a nonprofit organization, which manages federally funded research and development centers for the Department of Defense and other government agencies. They only have about 7,000 employees but many of them are researchers with advanced degrees. Like several other companies that made the Best Retirement Plans list, Mitres focus is on retaining its talent, so they offer a generous retirement plan that could pay employees 80 percent to 100 percent of their salary after they retire. The company's match, when combined with employee contributions can be up to 12 percent of an employee's salary. Vesting is immediate. Employees have over 100 investment options to choose from for their retirement funds, ranging from conservative to aggressive. Plus, the company offers a variety of financial-education options. Currently, 99 percent of employees are participating in the plan.

3. PUBLIX Headquarters: Lakeland, Fla. Number of Employees: 142,000 Year founded: 1930 Publix is a grocery chain in the southeast U.S. that boasts a very unique corporate culture Its entirely employee-owned and -managed. Pay isnt typically great in the supermarket industry, Markowitz noted, but Publix uses the employee ownership of the company as a way to fund their retirement.

The company offers an employee stock ownership plan (ESOP) as part of its retirement plan, as well as a traditional 401(k). The average company contribution to the ESOP is 10 percent of wages. The average annual return on the stock is 17 percent. We believe our philosophy of employee ownership contributes to our success, spokeswoman Maria Brous said. Markowitz said the best way to learn about a company is by speaking to someone who works there. Sites like Yelp.com and Glassdoor.com, where people talk about whats good and bad at their company, are also great sources to learn about a company and what benefits they offer.

4 .USAA

Headquarters: San Antonio, Texas Number of Employees: 22,000 Year founded: 1922

USAA, which provides financial services to military families, provides a rich retirement plan for its employees: They match dollar for dollar up to 8 percent of an employees pay, plus they contribute 9 percent every year to a cash balance pension plan. Plus, if the company hits certain performance targets, they provide employees with a bonus contribution to their retirement savings, which varies from 3 percent to 9 percent, depending on the employees age. That means they could end up saving the equivalent of 19 to 25 percent of their pay each year. Employees are automatically enrolled and get their first contribution with their first paycheck and the account is vested after just two years. The company also offers subsidized health care for retirees. USAA is big on financial education, with an in-house team of financial advisers and free personal financial planning seminars for employees.

5. Microsoft (MSFT) Headquarters: Redmond, Wash. Number of Employees: 88,600 Year founded: 1975 Its a long way from 1975, when a young computer whiz dropped out of Harvard after just two years to start what would later become one of the biggest software companies in the world. Today, founder Bill Gates is one of the richest men in the world and Microsoft has earned its place on the best retirement plans list by offering to match 50 percent up to 6 percent of an employees pay. Employees are immediately eligible and immediately 100 percent vested. There are three tiers of investment offered, depending on the employees experience and interest in investing. The company also offers a financial-education program for employees. Over 87 percent of employees participate in the retirement plan.

CEO COMPENSATION:
Executive pay (also executive compensation), is financial compensation received by an officer of a firm. It is typically a mixture of salary, bonuses, shares of and/or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance. Over the past three decades, executive pay has risen dramatically relative to that of an average worker's wage in the United States, and to a lesser extent in some other countries. Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. Executive pay is an important part of corporate governance, and is often determined by a company's board of directors. Compensation for executive managers is different from compensation for other employees in most organizations. Executive compensation covers employees that include company presidents, chief executive officers (CEOs), chief financial officers (CFOs), vice presidents, occasionally directors, and other upper-level managers. These high level employees are paid executive compensation. Executive compensation is different from compensation for lower-level employees. The salary and other benefits are negotiated and are documented in a customized employment contract. The contract spells out compensation, benefits, perquisites, performance bonuses, separation and severance agreements, and other special terms of employment. There are six basic tools of compensation or remuneration.

salary short term incentives (STIs), sometimes known as bonuses long-term incentive plans (LTIP) employee benefits paid expenses (perquisites) insurance

Executive compensation often includes:

base salary, bonuses, incentives such as stock options, income protection guarantees in the event of a sale, public stock offering, or other liquidity event,

a guaranteed severance package in the instance of employment termination for reasons other than cause,

a signing bonus for coming onboard, additional executive-only benefits such as additional paid vacation, and Perquisites (perks).

The combination of salary, incentives, and bonuses is often referred to as Total Cash Compensation (TCC) for executives. Executive compensation is negotiated between the potential executive and the employer. Where non-executive compensation is most often similar in characteristics among employees, executive compensation is negotiated and agreed to in an employment contract and may include substantial differences from the organizational norm. The executive offer letter, in contrast with a lower level employee offer letter, is more detailed and contains a variety of options usually not available to other employees. TYPES OF COMPENSATION PLANS:

Supplemental Executive Retirement plans: In a Supplemental Executive Retirement Plan (SERP), your business agrees to make defined contributions or provide defined future benefits for the employee with no change in the employee's current base salary or bonus. So, to the employee, the SERP feels very similar to a non contributory tax-qualified plan-such as a SEP or profit-sharing plan. However, because your employee has to satisfy specified conditions over time to receive these benefits, the plan has sometimes been referred to as golden handcuffs.

Traditional Deferred compensation plans: In a traditional deferred compensation plan, the participating employee elects to defer receipt of a portion of base salary or bonus until sometime in the future, such as retirement. Your business may agree to "match" a portion of the amounts the employee elects to defer. So, to your employee, this nonqualified plan seems much like making a pre-tax contribution to a 401(k) plan because it allows those participating employees to postpone paying federal income tax on the amounts deferred. Because of this similarity, it is sometimes called a 401(k) "mirror plan."