The contingencies covered by a pension plan are the reasons why a person can access the collection of a retirement benefit from said plan.
The main contingency that activates a pension plan is for the contracting party to retire 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 those cases, a pensioncan also be requested .
It should be explained that a pension plan is an investment vehicle through which regular contributions are made to a manager (public or private). Thus, in the long term such savings will grow and you can pay an income to your owner during your old age.
In each country the regulations regarding the pension system are different. In the Spanish case, for example, there is Social Security that is state. However, the person can additionally contract a private pension plan. That way, he complements his 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 / she agrees to the recognition of a benefit. Said remuneration 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 taxpayer 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 work. Then, you can request periodic compensation 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 taxpayer or the person designated in that case.
- Severe dependence or great dependence:It is when the contractor has lost an important part of his physical and mental abilities. This, as a result of age or a health condition. Thus, the individual can no longer work and requires the help of third parties to develop their daily activities. For this reason, a pension is recognized that the disabled person will receive or, in some cases, his agent.
Extraordinary contingencies covered by a pension plan
The extraordinary contingencies covered by a pension plan are:
- Long-term unemployment: The person comes a long period without earning 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 may not have the right to Social Security and you need to be enrolled in the public job search service.
- Serious illness:The plan holder, or someone who depends directly on him (or her), suffers from a severe illness that prevents him from developing his usual work activity, temporarily or permanently. Faced with this situation, it is feasible to request a 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.