FIN200 Assignment T1, 2018 Question: What do you think are the important factors that should be considered by tertiary sector employees when they are deciding whether to place their superannuation...

Table of Contents
Introduction    1
Difference between Defined benefit plan and Investment choice plan    1
Factors which affect the decision of the employees to choose the desired fund    3
Conclusion    4
References    5
Introduction
Superannuation and retirement funds are required by employees in every sector in order to provide a stable income after retirement. The major focus which is emphasized to the Employees for superannuation is to encourage the individuals in order to invest and save for their retirement years in order to have a stable future. Every government in the world today is emphasizing on the superannuation. The various governments in the developed countries are especially Proactive in defining minimum contributions which must be provided in order to comply with retirement funds or superannuation by the employers for their employees. The level of minimum contribution The Australian government has made it compulsory for the employers to contribute 9% of the employee's salary as the superannuation funds. Apart from the employer's, employees are also required by the government to contribute towards the superannuation investment. The major focus for introducing policy initiatives of superannuation is to decrease the burden on social security schemes of the government which provides the provision of payment of pension in order to support individuals after the retirement. Gallery, N., Newton, C., & Palm, C. (2011).
As there is a dual focus on the retirement funds, the first focus is by the governments and secondly, there is a realization by the individual employees regarding the safety of the future this has led to huge amount of funds flowing into the superannuation fund. Superannuation funds are maintained by various investment Institutions whose motive is to invest these funds into the profitable investment which can grow the money of their stakeholders without taking substantial risks because the motive of these investment schemes is to provide a reliable source of income to the individuals in their nonworking age. Gallery, N., Newton, C., & Palm, C. (2011).
Difference between Defined benefit plan and Investment choice plan
Since huge amount of money is already flowing into the superannuation fund, therefore, is superannuation fund along with Mutual Funds have become the largest investors in the Global equity markets of the listed securities. Gallery, N., Newton, C., & Palm, C. (2011).
One of the major large superannuation funds is Unisuper limited which currently provides fund Management services for all the employees involved in the tertiary academic sector in Australia.
It involved several universities including major colleges and other higher education Institutions. Since the huge amount of fund is flowing into the superannuation fund, therefore, several new innovative investment schemes and fund Management services are introduced in the recent years which has significantly increased the variety of the products which are offered as an investment in the super animation Ferns. The investors now have flexibility in deciding the type of funds which they want to choose in their superannuation plan.
Unisuper has also provided two types of superannuation plans to its investors, one is defined benefit plan and another is investment choice plan. The defined benefit plan is the plan where the benefits are given to the Employees after the retirement and these benefits are calculated based on a given formula which considers several attributes such as the average salary of an employee the age of an employee and the number of years for which a person was employed. In the given defined benefit plan the end amount received by employees is calculated as,
Retirement Benefit = Benefit salary ´ Length of membership ´ Lump-sum factor ´ Average service fraction
For the tertiary sector employees who choose to invest in the defined benefit plan, the contribution received from them is collected in a pool and then it is invested in the different type of acids which are...