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Retirement Videos 84 videos

Finance: What is a redemption charge?
8 Views

A redemption charge is a charge applied when you redeem shares of a mutual fund in a deferred commission purchase structure.

Finance: What is the Tax Reform Act of 1986?
4 Views

What was the Tax Reform Act of 1986? Hit play to find out.

Finance: What are Passive Investing and Passive Investors?
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What are Passive Investing and Passive Investors? Passive investing and passive investors are ones who opt to ride the market out over the long ter...

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Finance: What is a Pension? 31 Views


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Description:

What is a pension? Pensions are just retirement plans. Employers provide them and pay into funds as an investment for their employees. Once employees retire, they have income from the pension plan.

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Transcript

00:00

finance a la shmoop. what is a pension? well it rhymes with tension, and likely

00:08

for good reason. if you're a teachers pension or a fireman's pension or [person wearing dark glasses writes something down]

00:12

another state employees pension that's backed up by a state that's going

00:16

bankrupt. Hi, California, Hi Illinois. well we're looking at you. all right people

00:21

well a pension is another term for a retirement fund. but what's special about

00:26

a pension is that the employer essentially forces you to put away money

00:31

for your retirement and then they invested for you.

00:35

how nice. or at least be sure you invest it well on a salary of 75 grand a state [gambling table shown]

00:39

employed ditch-digger might get a contribution of say 10 grand a year into

00:42

her pension, and that's each year 10 grand of forced savings for as long as

00:47

she you know digs ditches for the state. and in some states where the unions are

00:51

strong in the governing financial knowledge is weak the government

00:55

guarantees a minimum financial return on the pension investment made on behalf of

01:00

the employees. that is in California for example the state guarantees a 10% per

01:06

year return on their invested pension savings. if the invested return like [equation]

01:11

investing it in Wall Street and stocks and bonds and private equity funds and

01:15

all that stuff well if that invested return is less than that number less

01:19

than that 10%, then the state rights to the pinch and a check to cover the

01:23

incremental difference. yeah it's a huge Delta and it's well pretty much why you

01:28

a Californian Illinois you're going bankrupt remember. Jesus Saves

01:31

but Moses invests. [ Moses, holding stone tablets glares and demands interest]

01:35

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