What’s A Retirement Program?

When we are at a productive age and working, we earn income to meet our daily needs. For those who work for an employer (companies, educational institutions, etc.) generally, receive regular income every month. When we reach retirement age, some of us still receive regular income from the employer in the form of pension. A pension plan is a retirement solutions program that strives to provide pension for participants.

What is a pension fund?

Individuals and groups of workers can join the pension program. Pension funds are non-bank financial institutions that carry out pension programs.

Employer Pension Funds are pension funds established by employers for some or all of their employees. Financial Institution Pension Funds are pension funds established by banks or life insurance companies for the general public, both employees and independent workers.

Pension funds are legal entities with management, operational activities, and assets separate from their founders.

Why do I need to join a pension program?

We need income to support ourselves and those needs do not stop even though we are no longer productive at work.

So that the fulfillment of our life needs is guaranteed even after retirement, so we need to prepare as early as possible.
There are many ways to prepare for sustainable income in old age. Following the retirement program is one of the best ways to prepare for welfare in old age. The program is designed to provide participants with pension benefits. By following the pension program we are educated to save money so that when we are no longer productive, we still receive income to sustain our lives.

What are my rights if I become a participant in a pension fund?

Our main right as participants of pension funds is, of course, the pension benefits that we will receive when we reach retirement age. The amount of pension benefit depends on the type of program we are taking.

For the types of defined benefit pension plans that are large, pension benefits are determined based on certain formulas which were set at the beginning. The formula is usually associated with years of service and our income.

For this type of defined contribution pension program, our benefit is highly dependent on the amount of the contribution paid and the results of fund development. The results of the development of funds in pension funds have the potential to be more profitable compared to some other financial products because pension funds receive tax facilities from the government.

In addition to the pension benefits, participants of the pension fund are entitled to obtain information about the organization of the pension fund that they participate in, their account balances, and other information related to pension funds.

What are my obligations if I become a participant in a pension fund?

For those who are participants of an employer pension fund, it is very likely that participants will have to contribute to a pension fund. These contributions are usually directly deducted from income and deposited into pension funds. For Financial Institution Pension Funds participants, fee payments are very flexible.

However, participants usually have to pay membership fees. Each pension fund participant is also required to fulfill administrative requirements such as submitting personal data and changes to the pension fund. This is important because some information is needed in the payment of pension benefits.

The arrangement of participant rights and obligations for each pension fund varies. Information about the rights and obligations of participants is contained in the Pension Fund Regulations. Each participant is entitled to obtain a Pension Fund Regulation.

These Are The differences Between Normal And Accelerated Retirements

A pension is someone who is no longer working because of his advanced age and must be dismissed, or at his own request (young retirement). A person who retires usually gets the right to a pension fund or severance pay. While the benefits of pension are periodic payments given to participants at the time and it’s within the specified requirements in the retirement solutions and Fund regulations.

After getting a quick overview of pensions and pension benefits, now you can get to know some of the types of pensions you need to know. In fact, retirement is not only done at a certain age, but there are other conditions that can change when you retire.

Well, if you want to find out more, let’s look at these two types of pension types that you need to know:

Normal retirement

Normal pension is a pension given to employees whose age has reached the retirement determined by the company. Participants who retire at the normal retirement age or after, are entitled to pension benefits calculated based on the pension formula that applies to their participation until retirement.

The normal retirement age is stipulated in the Pension Fund regulations and may not exceed the age set by the Ministry of Manpower.

In some countries, the normal retirement age is usually 55 years.

However, there are also those who give pensions after a certain period of service, even though they have not yet reached the normal retirement age. For example, giving employees retirement rights after reaching a certain service period such as 30 years of working age.

 
Accelerated Retirement

Accelerated retirement is a type of pension provided due to certain conditions, for example, there is a reduction in employees in the company.

Accelerated pension benefits are pension benefits for participants that are paid out if participants retire at a certain age before the normal retirement age.

This type of pension allows employees to retire early before reaching their normal retirement age. Usually, there must be a clear reason to submit an application to the employer so that his retirement can be accelerated.

Pension Fund Regulations reveal that employees are allowed to retire earlier than their normal retirement age with special terms and conditions after reaching a certain age, for example, 50 years.

In addition, it will also be seen meeting the minimum service period or if there are certain conditions that require employees to stop working.

For example, accelerated retirement can occur in the following conditions:

The age of the employee has reached 50 years.
Employees have worked with a service period of more than 30 years,
Associated employees have permanent disabilities.

You Might Want To Know About These Unique Pensions

Postponed pensions are the right to pension benefits for participants who stop working before reaching the normal retirement age, whose payments are delayed until the participant retires in accordance with the retirement solutions and Pension Fund regulations.

Usually, a postponed retirement can be done with the following conditions:

For pension fund participants who take the Defined Benefit Pension Program:

If you stop working after having a minimum membership period of 3 years and have not reached retirement age, you are entitled to receive a postponed retirement that is equal to the amount calculated according to the pension formula for membership until the time of termination.

For Pension Fund participants who take the Defined Contribution Pension Program:

If you stop working after having a minimum membership period of 3 years and have not reached retirement age, you are entitled to the number of your own contributions and the contributions of the employer and the results of their development which must be used to obtain a postponed retirement.

In addition, there are also other unusual types of pensions, that is the pension due to disability. A disability pension is a pension given due to an accident and is therefore considered incapable of being employed at a company.

Disability pensions are not related to the age of the employee and will be provided if the employee is disabled and is deemed no longer capable or able to carry out his work.

Why Need to Prepare Funds for Retirement?

For those of you who haven’t prepared a pension fund, of course, you often ask:

“What’s the point of setting up a retirement fund from now on, after all? There’s still plenty of time to prepare it. “

However, in fact, retirement is one stage of life that will come sooner or later.

Every human being must reach a point where he is not productive and must stop working.

Through the human life stage cycle, you can realize that retirement is the last stage in the life cycle, it’s usually reached at the age of 55 years and over. During this time, income graphs began to decline.

Unfortunately, many people fail to enjoy their retirement, due to lack of preparation from a young age. This is where the importance of a retirement plan.

With retirement planning, you will get the following benefits:

You can find out an estimate of how much money you need when you retire.

You can find out how long you have to invest to set up the pension fund.

Old-age fund planning will act as a map (guide), to clarify the direction of your investment. Did you know that many people are exposed to bulging investments because they do not know any retirement plan and are tempted by the “PROMISE” of big profits?

People Must Avoid This Retirement Mistakes

Most people will start investing for retirement when they already have several assets and quite a lot of finance. However, this turned out to be a big mistake that must be avoided. Saving early will get you a few years of compound interest that started earlier. The compound interest is something which happens when the interest you’ve earned from the amount you’ve saved in your bank account starts earning interest on its own. The more time you have to save money, the more compound interest can increase your savings. It’s such a simple idea, but it’s definitely one of the best retirement solutions. Without the benefits of compound interest, you must save more money and for a longer period of time.

Usually, when people reach 20 years of age, most people at this age will not focus on saving money for their retirement because they’ve decided to pay off student loans and start their own family. Although of course, the priority is also important, saving for retirement as early as possible is no less important.

In fact, even some people refuse to pay their salaries to be automatically saved for pension funds. Now, in this case, make sure you pay attention to the portion of retirement savings and get started right now if you want to enjoy a beautiful pension.

Then, even though you might feel older, wiser and, more mature in your 30s, you might still make some mistakes regarding retirement planning. The most common retirement savings error made by people in their 30s is usually only a little money that people try to contribute to their retirement. When entering your 30s, try to be disciplined in setting aside 10-20% of your income for retirement. Make sure you are disciplined in saving, not just saving when you have excess money.

After that, you Start ‘Serious’ When You Enter Age 40 and 50. People in their 40s and 50s who are already late enough to start investing their retirement savings often make fatal mistakes. People in their 40s and 50s who realize that it is too late to start now will try to cut corners and invest in aggressive investment instruments to make up for the time before.

However, as you get older, you only have a little time to fix the defects that might occur. So, if you use an aggressive strategy, you must risk losing savings without the chance for recovery.

Instead, this is a period where you might want to consider slowly transferring your assets to a more conservative and certain investment. Other pension savings mistakes to avoid include having too much debt and withdrawing your deposit or investment early. Attracting investments before the due date will make you lose some benefits such as compound interest that should be earned. In this case, reducing profits means reducing the amount of your retirement savings in the future.

Reasons to Work After Retirement Is the Right Choice

Entering retirement makes many people prefer to enjoy old age and no longer be productive work. However, not everyone likes to do this and prefers to work and return productive in old age. The decision to return to work in old age turned out not to be a bad choice. The following is an explanation of why working after retirement is retirement solutions for you.

The following are some of the reasons why you work again after retirement:

– Work Makes You Stay Healthy Physical and Mental

Staying active at work can actually make you mentally and physically healthier. Not only that, because the work done can make you socially active and prevent yourself from being socially isolated in old age.

– Enjoy the Work Performed

You can work in areas that you really like and only need less time to work. As you know, doing something you like with the heart feels more fun.

– Working Part-Time While Enjoying Old Age

Don’t work full time when you retire, because working full time will be very physically and emotionally draining. It is better to choose a job that has a few working hours and offers flexibility. For example, you open a private course to children and teach them about the knowledge you have mastered.

– You Can Try a New Type of Job

If you want to work after retirement, you can hone the skills that are mastered and do it constantly. This can be a very appropriate choice to do. Another thing to consider is to choose the type of work that you most like to do.

– Work Makes You Active and Can Avoid Boredom

No longer active at work makes many retirees feel bored at home. Especially for parents who live far from their children and grandchildren, of course, the feeling of loneliness will be haunting every time. By working, parents will avoid boredom and can fill their time to be more productive.

– To Increase the Number of Savings

For those of you who do not prepare well for old age, returning to work is one of the choices that need to be made so as not to depend on children and grandchildren. Working allows you to earn an income that can cover your daily needs.

Therefore, we strongly encourage you to invest in youth. The goal is that the investment results that have been made can be used in old age and you no longer need to work after retirement. Start investing and prepare for retirement funds at the beginning of your career, because the sooner you start the lower the money you will need to set aside to invest.