Some companies in Mexico opt to establish pension plans that pay a benefit at retirement, complimentary to Social Security, in accordance with the needs of their employees. Our objective is to provide the client with the services of designing, valuating, implementing and administering their Private Pension Fund to the benefit of their personnel.
Here we present the principal characteristics of the different types of pension plans that exist and their advantages for both the company and the employees.
For the company.
It is a scheme that allows the company to provision the benefits gradually until retirement and anticipate the deduction of the said benefit.
It is an instrument that is used to reduce staff turnover and serves to attract new talent.
Private pension plans can be as flexible as the company decides with regards to the size of contributions, their frequency, the investment of resources and the tables of rights acquired amongst other things.
For the employee.
A private pension plan will provide the employee a complementary pension that allows him to maintain a similar life style as when he was working.
There are important tax benefits due to the tax exeption by a Pension Plan is greater that if payment is made as a liquidation. Moreover the employee has the ability to deduct from his annual tax the contributions that are made to the plan.
With the idea of implementing a Private Pension Plan, we must do as follows:
Design:In this phase, the benefits that the fund is going to give are pre-established, as are the way in which they will be financed and who is going to pay them. In addition the age of retirement and the amount to be received at retirement are established by the Company.
Valuation: Costs are been analyzed from different angles as well as several retirement options are projected and evaluated.
Implementation:In this phase, the formulation of the draft for the Text Plan is done in addition to organizing the steps that have to be taken in order to register and then implement it. Also, in this phase an investment portfolio strategy needs to be considered.
Communication: Structure and advantages of the New Pension Plan then need to be communicated to all employees.