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.