You can: take a pension annuity and receiving a monthly check; or, if your employer allows, take a lump-sum distribution, which you will need to invest and manage: lump sums can be rolled into an IRA, where you are taxed only on money you decide to take out.

How are pensions usually paid out?

Your traditional pension plan is designed to provide you with a steady stream of income once you retire. That’s why your pension benefits are normally paid in the form of lifetime monthly payments. Increasingly, employers are making available to their employees a one-time payment for all or a portion of their pension.

How does pension administration work?

Pensions administrators are responsible for the day-to-day administration of pension schemes and life insurance policies. They make sure that new and existing customers’ policies are accurately maintained and serviced. Their responsibilities can vary depending on the size and structure of their organisation.

What is pension scheme administration?

A Pension Fund Administrator (PFA) is a company licensed by the National Pension Commission to manage and invest the pension funds in the employee’s Retirement Savings Account (RSA).

What is the purpose of a pension fund?

Most pension funds, other than some government-related pension funds, are defined contribution funds, which means the pension fund collects contributions from its members and invests these contributions into investments that provide the members with a retirement income.

How does an employer contribute to a pension plan?

A combination of employee and employer contributions fund benefits, with employers paying the largest share. Private plans typically are configured to pay 1% for each year of service times the average salary for the final five years of employment.

Are there any pension funds in the private sector?

For some years now, traditional pension plans, also known as pension funds, have been gradually disappearing from the private sector. Today, public sector employees, such as government workers, are the largest group with active and growing pension funds. 1 This article explains how the remaining traditional pension plans work.

What are the two types of pension funds?

There are two types of pension funds – a defined benefit fund and a defined contribution fund.