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Terms of retirement:
Key pension phrases
A critical part of understanding how
pension plans work involves learning the
definitions of important terms.
Assets: In general: possessions that
have value in an exchange. In pension plan
discussions: the money available to meet a
plan's obligations.
Discount rate: The rate of interest used to calculate the
present value of a number of future payments.
Liabilities: A financial obligation
such
as a cash outlay that must be made at a
specific time to satisfy the obligation's contractual terms.
Present value: The
amount of cash today that is equivalent in value to a payment, or to a stream
of payments, to be made (or received) in the future.
Trust fund: The monies kept
in a trust, which is a fiduciary relationship in which one party (the trustee)
holds the title to
assets for the benefit of the beneficiary.
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The
business media has been buzzing lately about corporate pension plans.
You're probably hearing phrases like ''under-funded plans,'' ''charges
to equity'' and statements about ''likely future financial impacts''
that involve some pretty substantial dollar amounts.