Retirement Planning and Employee Benefits

CFP^CM Certification Education Program Syllabus

Module III - Retirement Planning and Employee Benefits

COURSE DESCRIPTION: This module would cover the knowledge requirements relating to retirement planning and employee benefits for a CFP professional. The emphasis is on the process of wealth creation and the retirement planning and strategies for clients.

Introduction to Retirement Planning

1	Issues in retirement planning
	a. Importance of retirement planning
	b. Life expectancy and career stability
	c. Pre-retirement counseling
2	Wealth creation
	a. Wealth accumulation and erosion
	b. Early retirement, living longer than expected, delaying retirement
	c. Effect of inflation

Retirement Benefits

3	Types of plans
	a. Defined benefit plans
	b. Defined contribution plans
	c. Defined benefits v/s defined contribution plans, employer’s and employee’s perspectives
	d. Trends and reasons for transition
	e. Portability of plans
4	Defined benefit plans
	a. Gratuity and the Payment of Gratuity Act, 1972
	b. Leave Salary
	c. Retrenchment compensation and the Industrial Disputes Act, 1947
	d. Voluntary Retirement Scheme
	e. Nature of defined benefit, tax issues in defined benefit plans, age/service requirements, applicability of plans to clients
5	Defined contribution plans
	a. Statutory provident fund, Provident Fund Act, 1925
	b. Recognized provident fund, Employee Provident Fund and Miscellaneous Provisions Act, 1952, Employees’ Provident Fund Organization, features, mode of operation and investment norms
	c. Unrecognized provident fund
	d. Employees’ Pension Scheme, 1995, features, funding of scheme
	e. Employees’ Deposit Linked Insurance Scheme, 1976, features, funding of scheme
	f. Public Provident Fund, features
	g. Nature of defined contribution, tax issues in defined contribution plans, withdrawal norms, applicability of plans to clients
6	Superannuation and other retirement plans
	a. Trust funds – fiduciary responsibilities
	b. Approved superannuation funds
	c. Employer pension plans and applicability to client
	d. Private fund managers, investment norms
	e. Pension plans from mutual funds and insurance companies
	f. Social security benefits – civil servants, defense personnel and war widows, agricultural workers, destitutes, disaster affected people, etc.
	g. Retirement plans for self-employed
	h. Profit sharing plans
7	Group Life and Health Insurance
	a. Group insurance contracts and characteristics
	b. Basic underwriting principles and eligibility requirements of group plans
	c. Group life insurance plans
	d. Group medical insurance plans and managed care
	e. Group disability-income plans
	f. Workers compensation

Retirement Planning and Strategies

8	Retirement needs analysis
	a. Determination of financial objectives at retirement
	b. Estimating retirement expenses
	c. Calculation of retirement funds available to meet objectives
	d. Calculation of additional funds needed to meet objectives
9	Retirement income streams
	a. Employer pension scheme
	b. Commuted and uncommuted pension, tax treatment, advice on commutation
	c. Immediate and deferred annuities
	d. Other income streams and their tax treatment – fixed deposits, rental income, schemes from Indian Savings Organization, monthly income plans
10	Post-retirement counseling
	a. Investment risk and constraints
	b. Investment portfolio evaluation, restructuring of investments or debt
	c. Risk tolerance and attitude to equities
	d. Client’s health, interests and hobbies, home, vacations, gifting

Pension sector reforms

11	Need for reforms
	a. Demographic trends
	b. Coverage of population, organized and unorganized sectors, employment trends
	c. Un-funded pension liabilities
	d. Deficiencies in existing schemes
12	Reform proposals
	a. Project OASIS and its recommendations
	b. World Bank’s recommendations, multi-pillar reforms, Chilean model
	c. Pensions Authority
	d. The role of the state – developmental state (East Asia), welfare state (Europe and North America), minimalist state (Europe and North America)