About Long Term Pension Liabilities
January 11, 2012 by Annabelle Rowan · Leave a Comment
Pensions are long-term retirement plans that are funded by an employer on behalf of the employee. Your employer contributes a significant amount of money toward your retirement. An employer who bothers to set up a pension incurs a liability; this liability is the payment of benefits to you. To meet the promises of the pension, the plan may employ various insurance contracts.
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A pension may employ the use of annuity contracts to ensure that long-term liabilities are satisfied. An annuity is an insurance policy that guarantees payment to an individual for life or a set number of years. A pension annuity provides the employer with a simple way to manage pension liabilities.
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