Answer this question Assignment Example | Topics and Well Written Essays - 500 words

Answer this question - Assignment Example Those who earned more contributed more and hence will receive more. Those in the public sector either rely on their pensions or the 403(b) which is available for the church ministers, certain tax-exempt organizations as well as public school employees. The retirement money is provided through an insurance company, invested in mutual funds or a retirement account set up. The public employees’ retirement system is common in the state of Nebraska making it stand out from the other states such as Kansas as the retired public employees live comfortably on their retirement savings plan paid monthly (Fenge, De Menil and Pestieau 172). Americans have moved from the corporate sponsored retirement plan where the corporates were offering pensions. With the increase of people in this sector, the plan was simply too much to sustain and the employers moved towards the defined benefit (DB). The DB plan is sponsored by the employer in addition to employee contributions. The money is then pooled together with the available funding from government and other sponsors of the plan. Employees under this plan are therefore able to receive certain benefits based on their number of years in service as well as their average salary. The DB plan can also offer payment monthly for as long as the annuitants live instead of a lump-sum distribution option (Slesnick and Suttle, 115). There is also the retirement plan of defined contribution pension plan (DC) which works similarly like a regular insurance. The employer specifies the amount of money needed for the plan to be contributed on a regular basis. The money in invested and the performance of the investment over time as well as amount contributed will determine how much they will get in their retirement funds. Even though the plan provides more flexibility in payment, the investment risks are shouldered by the employee (Slesnick and Suttle,