1.
How are pensions described in this article?
"Don’t save," say the governments of rich countries as they worry about demand in economies that are somewhere between sluggish recovery and recession. "Save," say those same governments as they consider the ageing of their populations and the potential pressure on government money.
Pension funds are caught in the middle of these contradictory messages, and they are suffering. Offering a pension is like a debt, since it involves the promise of a series of future payments. When pension funds calculate the value of their liabilities, they therefore use a bond yield to reduce future payments. As bond yields fall, the liabilities rise.
Households may have been discouraged from saving, just 3.8% of income in
Meanwhile, many companies have switched to defined-contribution (DC) schemes for all new staff which place the investment risk on the employee. According to the Pensions Corporation, a 35-year-old who funds a DC scheme at the current level will retire on just 8% of his final salary. To earn the equivalent of a pension worth half their final pay-cheque, they or their employer would have to contribute 55% of their salary.
How are pensions described in this article?
According to the article how much should an average person save every month in order to retire on a pension worth 50% of their last salary?
Meanwhile, many companies have switched to defined-contribution (DC) schemes for all new staff which place the investment risk on the employee.
Which of the following does switched mean?
When pension funds calculate the value of their liabilities, they therefore use a bond yield to reduce future payments. As bond yields fall, the liabilities rise.
What is a bond yield?
Based on the information in the article, how can individuals prepare for the future?
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