Page 39 - Life Assurance

efit formulas:

Qualified retirement plans are designed to
pay retirement benefits, which, together with
social security retirement benefits, will generally
restore about 45 to 80 percent of the worker's
insured earnings prior to determine
contributions or benefits.

1- Defined-Contribution Formulas:

In a defined-contribution formula, the
contribution rate is fixed, but the retirement
benefit is variable. For example, both the
employer and employee may contribute 8
percent of pay into the plan (one month per year).
Although the contribution rate is known, the
retirement benefit will vary depending on the
worker's current age, earnings, investment
returns, and retirement age.

A fixed percentage of wages is typically
used to determine the retirement contributions.
For example, both the employee and employee
may contribute 8 percent of wage into the plan.
Each employee has an individual account, and
the actual retirement benefit will depend on the
value of the employee's account at retirement.

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