When an employee retires, he no longer gets a salary, but his need for a regular income continues. Lump sum payments that are referred to as provident fund on retirement may be imprudently spent and this would leave the employee without a regular income during his lifetime after retirement. Saham Retirement Benefits Scheme is therefore designed to enable employers to plan for a more secure future for their employees by ensuring that; steady income/pension will be available for life after retirement.
The Scheme can either be set up on a contributory or non- contributory basis and Saham Insurance Company operates a Contributory Scheme or Defined Benefit Scheme for its employees and customers which is defined as follows:
Money Purchase Scheme/Defined Contribution Scheme
this is where the rate of contribution by the employer and the employee (if any) is decided or fixed in the rules in advance and in relation to the employee's salary. The end benefit is a function of the accumulated contributions and interest made. Saham will then utilize these contributions to purchase the appropriate pension at retirement.
In essence, this is one approach for Retirement Benefits Scheme. The choice, which is made by the employer, governs the long term funding requirements. The assets of the Scheme are held in separate trustee administered funds, which are funded from contributions from both the company and employees.
The Benefits of Pension Scheme to the Employer include:
Retaining the services of efficient and experienced staff
Improved management relationships
Better employee morale leading to greater efficiency and productivity
Tax relief on contributions
The Benefits of Pension Scheme to the Employee include:
Better scope to the younger and brighter people in the organization through promotional opportunities.
Tax relief benefits on employee contribution through P.A.Y.E system.
Tax relief on contributions.