What Is Contingencies Covered by a Pension Plan? Definition of Contingencies Covered by a Pension Plan, Contingencies Covered by a Pension Plan Meaning and Concept
The contingencies covered by a pension plan are the reasons why a person can access the collection of a benefit upon retirement from said plan.
The main contingency that activates a pension plan is that the contractor goes into retirement upon reaching a certain age. However, there are exceptional circumstances that prevent the person from continuing to work, such as an accident that causes disability. In such cases, a pension can also be claimed.
It should be explained that a pension plan is an investment vehicle by which regular contributions are made to a manager (public or private). Thus, in the long term, these savings will grow and you will be able to return an income to its owner during his old age.
In each country the regulations regarding the pension system are different. In the Spanish case, for example, there is the Social Security which is state. However, the person can additionally contract a private pension plan. In this way, you supplement your retirement to meet the expenses of the elderly.
Main contingencies covered by a pension plan
The main contingencies covered by a pension plan are:
- Retirement: When the individual reaches the retirement age established by law, he agrees to the recognition of a benefit. Said compensation is paid regularly, for life or until the worker's funds run out. This depends on how the country's pension system works.
- Early retirement : The contributor usually has the option to retire a few years before the legal age. However, you must meet certain conditions, such as reaching a certain level of savings in your pension fund.
- Disability: If the person is permanently unable to exercise their usual profession or, in general, any job. Then, you can request a periodic remuneration that will depend on your pension plan.
- Death: In this case, it is the beneficiaries who request a benefit. It may be the direct family of the contributor or the person designated in such a case.
- Severe dependency or great dependency: It is when the contractor has lost an important part of his physical and mental capacities. This, as a result of age or a health condition. Thus, the individual can no longer continue working and requires the help of third parties to carry out their daily activities. For this reason, a pension is recognized that the disabled person or, in some cases, his or her attorney-in-fact will receive.
Extraordinary contingencies covered by a pension plan
The extraordinary contingencies covered by a pension plan are:
- Long-term unemployment : The person goes a long period without receiving income. Then, there is the option of accessing a benefit meeting certain requirements. In Spain, for example, the applicant must have been unemployed for more than twelve continuous months. In addition, you cannot be entitled to Social Security and you must be registered with the public job search service.
- Serious illness: The plan holder, or someone who reports directly to him (or her), suffers from a severe illness that prevents them from carrying out their usual work activities, temporarily or permanently. Faced with this situation, it is feasible to request payment under certain conditions. One of them in Spain, for example, is that the affected person is prevented from working for more than three months.