Pension Plans 
COVENTRY UNIVERSITY
M07EFA Institutional investments Coursework
Course Leader: Karen McGrath
Word Count: 1820
Student’s Name:
LI XIAO LIN 5453418
Topic 5
1.Introduction
The rapid growth of the pension schemes has a dramatic institutional effect on national labor and financial markets in past several decades and this upward trend will probably continue in the future. So we will embark on a study of pension plans.
Enterprise annuity plan is a system that according to enterprise’s economic strength and conditions established, aiming to secure staff retirement income and beyond the basic old-age insurance system for the government enforce. Enterprise pension funds is an important supplement of basic endowment insurance system, its direct purpose is improve the level of pension to retired workers. Enterprise annuity plan is generally regard as an important part of human resource management strategy, because it is able to attract and retain employees who long-term serve for enterprise and improve labor productivity through providing them with a retirement pension funds. According to the accumulation of pension funds and the difference of payment methods, pension scheme could be divided into two types; one is defined benefit and another is defined contribution.
The essay will introduce definition of the two pension plans at first, and then distinguish between two different pension types from different perspectives, and thus analyze their advantages and disadvantages. Finally, explain why DC plans has became increasingly important in corporate pension plans. Taking the 401(k) project for example to analyze the reason for its success.
2.Definition
Under a defined benefit (DB) plan the staff’s pension benefit premium is determined by a formula, which based on length of employment and salary or wages in most situations. That is to say, the DB mode provides participants or beneficiaries with a certain quantity of pension in every month since
M07EFA Institutional investments Coursework
Course Leader: Karen McGrath
Word Count: 1820
Student’s Name:
LI XIAO LIN 5453418
Topic 5
1.Introduction
The rapid growth of the pension schemes has a dramatic institutional effect on national labor and financial markets in past several decades and this upward trend will probably continue in the future. So we will embark on a study of pension plans.
Enterprise annuity plan is a system that according to enterprise’s economic strength and conditions established, aiming to secure staff retirement income and beyond the basic old-age insurance system for the government enforce. Enterprise pension funds is an important supplement of basic endowment insurance system, its direct purpose is improve the level of pension to retired workers. Enterprise annuity plan is generally regard as an important part of human resource management strategy, because it is able to attract and retain employees who long-term serve for enterprise and improve labor productivity through providing them with a retirement pension funds. According to the accumulation of pension funds and the difference of payment methods, pension scheme could be divided into two types; one is defined benefit and another is defined contribution.
The essay will introduce definition of the two pension plans at first, and then distinguish between two different pension types from different perspectives, and thus analyze their advantages and disadvantages. Finally, explain why DC plans has became increasingly important in corporate pension plans. Taking the 401(k) project for example to analyze the reason for its success.
2.Definition
Under a defined benefit (DB) plan the staff’s pension benefit premium is determined by a formula, which based on length of employment and salary or wages in most situations. That is to say, the DB mode provides participants or beneficiaries with a certain quantity of pension in every month since