Corporate Financial Management Superannuation Contribution Sample

Questions: 1.What are the important factors that should be considered by tertiary sector employees when they are deciding whether to place their superannuation contributions in the Defined Benefit Plan or the Investment Choice Plan? What issues relating to the concept of the time value of money may be important in this decision-making process? 2.If the efficient-market hypothesis is true, the pension fund manager might as well select a portfolio with a pin. Explain why this is not the case? Answers: 1. The employees of the territory sector should consider some of the significant factors at the time of the decision-making process. The decision includes whether to invest their superannuation contribution in the investment choice plan or defined benefit plan. The employees would be required to allocate an amount of income into the superannuation. The main aim to introduce the superannuation polices initiatives is to eliminate the issues from the social security system in the provision of the pension payments that helps the individuals at their retirement stage (Chen and Hao, 2013). The defined benefit plan is the plan where the benefits are paid to the employees at their retirement by the formula that includes the determinants such as age, the number of years and salary of the employees. The retirement benefit is estimated as: Retirement Benefit = Length of membership * Benefit salary * Average service fraction * Lump-sum factor The employees in the tertiary sector who select the Defined Benefit Plan, superannuation contributions are invested and pooled in the assets identified by the company. The final benefit payment is estimated by the above-given formula and investment performances of the asset portfolio is not relevant, and it does not affect the final retirement payment of the employees. Thus, it shows that the employees are not benefited from the profits earned by the asset portfolio as the risk of investment is associated with the performance of the company. It is the responsibility of the company to fund the defined benefits. The company of the defined benefit plan has the discretion to pay the additional benefits on the annually adjusted basis (Dauber, 2005). However, it is not guaranteed by the company and form a small proportion of the superannuation benefits under the plan. The employees who select the investment choice plan and the investment account includes personal superannuation, the annual distribution of the profits earned on the invested contributions, management charges, and administration. The employees can select the types of portfolios or assets under investment choice plan that the superannuation contributions are invested. The following investment strategies are as follows: Secure fund: The Australian fixed cash and interest securities Stable Fund: Bond securities and fixed interest with the exposure of overseas and domestic property and shares Selection fund of the company: The balanced fund of overseas and domestic property, shares, private equity and infrastructure (Dvorak, 2012). Shares Fund: The investment in overseas and domestic shares The strategies can be differentiated on the return and risk characteristics with secure funds and provide lowest average returns in comparison with the share funds that carries the highest level of risk, but it is expected to provide high average returns. The employees who select the investment choices funds at their final retirement payments is dependent on the generated returns by their selected investment strategy and bearing the risk of investment associated with the superannuation contributions (Emery, Finnerty and Stowe, 2011). At the time of the retirement, the companies provide a wide range of investment products for investment choice plan and defined benefit plan subscribe to distribute and manage the retirement benefits. It includes the following investment options or pension: Indexed pension: Regular income is provided that is indexed to the inflation and payable till the employee live and transferring to the spouse. Life indexed pension: Regular income provides to the employee and access to the capital and available investment strategies in which the capital can be placed. Roll over option: The employees can select to transfer the retirement funds balance to the approved industry or personal superannuation, an approved retirement saving account or deposit fund. Cash distribution: An amount of the retirement fund can be taken as the cash that can be used for personal or investment consumption purposes (GERRANS and CLARK, 2013). The employees can select the combination of the following alternatives with decision-making process which is depended on their lifestyle requirement and income. The decision making consideration of return profile and investment risk are paramount and the effect of time of the value of money and inflation. The employees should have the idea of where and when to invest their investment to ensure to be safe. The employees will invest in the low-risk portfolio and to cope up with the obligations. The tertiary sector is one of the most developing sectors in the market, and many employees are employed in this sector. The superannuation is the pension program which is created by the organizations for the benefit of the employees (Helbk, Lindset and McLellan, 2010). The funds are deposited in the superannuation account which increases as per the rules and regulations. Thus, the superannuation program is carried out by the organizations to support the life of the people after their retirement . The employees should select the programs in an appropriate manner so that they would be able to get the maximum benefit. The time value of money is very much significant in the decision-making process. The employees have to save funds for the future purpose as well as for their family. The companies also implement rules and regulations for the welfare of the employees. The benefits are depicted to be showing the various creations of the illustrations which are explaining the differentiations which are made in the form of the retirement plan and also the explanation of the focus is being made by showing the construction of the work which is being made by showing the enhancement of the study. The superannuation forms of the study are intensified by depicting the illustration of the Australia. The mandating and the proactive conditions which are showing the contributions for complying nature and also this is showing the explanation in the form of showing the forms of the contributions (Horngren, 2013). The allocation of the certain ranges of the nature of the forms is also illustrated to be showing the increment of the superannuation amount. The enhancement of the work is showing the appropriate amount which is being shown in the form of the illustrated forms which is showing the enhancement of the work. The focus is being created by the conduct which is showing the impetus by showing the introduction of the work and also the superannuation policies are made for the purpose of showing the removal of the burden and also the social security system. The support at the retirement stages of the lives and also the provision of the pension payments. The representation is being shown by showing the represented in the form of the financial institutions and also the superannuation funds and also it enables the enhancement of the work which is showing the mutual funds and also is indicated in the form of the equity securities in the security share markets of the Australia (Ippolito, 2014). The benefits are provided in the form of the difference which is created in the form of the savings and also the plans are established by showing the explanation of the tertiary education in the form of the employees are shown during the formulation of the investments. The plans are made by showing the enhancement of the work and also the explanation of benefits are appropriately made by depicting the enhancement of the investment risks. The appropriate risks are categorized by showing the form of the collection of the binds in the form of the bond securities and also the domestic shares are included in this case (Oppermann, 2009). It clearly shows the appropriate explanation of the work which is being made by showing the appropriate illustration of the securities which are made for showing the appropriate balance in the shares and also the fixing of the shares are being made by illustrating the views. The contribution of the superannuation is being shown in the form of the pooled ex planation of the work, and also the explanation clearly shows the annual adjustments which are included in the form of the payouts that are made to the employees during the time of the retirement. This enables in ensuring the values that are constructed for showing the appropriate purpose of the work as it is illustrated in this case (Rahman, 2015). 2. The strong and the efficient market is being shown by appropriately determining the hypothesis which is showing the explanation of the information included in this study. The study simply includes both the private and the public which is being represented by showing the proper framing of the work structure and also is enabled of focusing on the enhancement of the cycles. The trends are included in the form of showing the counting which is being included on the part of the financial manager and also the cycles must be produced for showing the counting of the trends. The innovation is being included a part which is being analyzed by showing the enhancement of the counting in the form of the trends. The focus on the enhancement of the structure is being shown by showing the appropriate enhancement of the returns which are being analyzed for the explanation of the superior rate of the returns (Rayman, 2013). Therefore the prices are illustrated in the form of showing theories in the f orm of the structuring the appropriate forms in an appropriate way. The theories clearly includes the appropriate analysis which is being included in the form of depicting an appropriate structure of the work and the efficient explanation of the structure is being made by depicting the consistent rates and also the analysis is being depicted to be dependent on the weak, semi-weak and the superior rates which are considered in this case (Schmidt, 2016). Therefore, the enhancement of the efficient market hypothesis is being made by depicting the enhancement of the study and also the enhancement of the work is being made by depicting the explanation of the work. The efficient market hypothesis is being shown by depicting the illustration of the profit which is being made by depicting the illustration of the predictive price and also the suggestions can be easily made by depicting the appropriate illustration of the work which is depicted to be unlikely in nature. The main theory which is linked with the prices that are involved in it and also the arrival is being made by showing the illustration of the difficulties and the changes in the prices (Yip, 2010). Therefore the enhancement of the structure of the market is showing the reflection of the information. The explanation of the security prices are explained in this case which is being involved in the form of the study and also the reflection on the trade is being shown by including the explanation of the work and also the expansion of the work is being made by depicting the enhancement of the work. The construction of the work is being made by depicting the appropriate explanation of the work. The resource is showing the mispricing the significant amount of the work in this case. The reflection is being made by showing the stocking of the resource is being made by showing the explanation of the work (Zhao, Wang and Wei, 2015). This also shows the explanation of the work and also the detection of the stocks are illustrated in this case, and also the undertaken case is showing the proper explanation regarding the misprice as detected in this case. References Chen, S. and Hao, Z. (2013). Funding and investment decisions in a stochastic defined benefit pension plan with regime switching*.Lithuanian Mathematical Journal, 53(2), pp.161-180. Dauber, N. (2005).2006 Auditing standards. Canada: Thomson. Dvorak, T. (2012). Timing of Retirement Plan Contributions and Investment Returns: The Case of Defined Benefit versus Defined Contribution.The B.E. Journal of Economic Analysis Policy, 12(1). Emery, D., Finnerty, J. and Stowe, J. (2011).Corporate financial management. Morristown, NJ: Wohl Publishing. GERRANS, P. and CLARK, G. (2013). Pension plan participant choice: Evidence on defined benefit and defined contribution preferences.Journal of Pension Economics and Finance, 12(04), pp.351-378. 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