Financial Safety Advice

Retirement is a stage in the life of every worker who inevitably arrives. For a release is not having to work, forget about work hours and schedules and to devote more time to himself, his family and hobbies. For others, however, is a vacuum that does not know how to fill.

Either way, we must be prepared for that moment, but it must be psyched that between payroll and pension will be a difference, which can be high or low depending on several factors, including the years that have contributed while it was active. So have some extra snap as a company pension plan , improve the financial situation of many workers after retirement.

The Toledo Pact as a guarantor of pensions

The public pension system is supported by contributions from companies and workers to Social Security and is backed by the Toledo Pact . So much for some and for others there is an obligation to contribute to the common fund to keep the system running, which is based on the distribution and not on the capitalization , so that although there is a belief that guarantees a pension contributions in the future, nothing is further from the truth.

This covenant ensures that pensioners only charge a pension as long as a balance between active and retired workers , but at the rate we’re going that proportion is ceasing to be perfect. As things continue as they will be hard to add up bills, whether it is considering raising the age to retire until age 67, and even lower the perceptions of pensioners around ten percent.

As time passes new proposals will be heard trying to find the feasibility and balance system, which at first without having to think too much would go through a drastic drop in unemployment, which would be a logical increase in contributors. Read the rest of this entry →

Once it comes to retirement many people find that it is possible to enjoy it due to economic factors. Without the existence of a scheme secure retirement, the feeling of a comfortable life may seem impossible.

According to the Department of Labor U.S., Social Security provides only a small portion of financial protection, although a third of Hispanic retirees depend on a paycheck as the sole source of income.

Obstacles to a comfortable retirement

Theresa Cruz-Myers, Associate Vice President of Marketing and Education Nationwide Retirement Solutions, says that Hispanic employees often make many sacrifices for their loved ones, but when they cease to belong to the workforce, they also sacrifice their lifestyle significantly . This is especially evident in the case of Hispanics, who believe their children or relatives take care of them in their old age, so do not consider as a priority adequate planning.

According to the Department of Labor, United States, women are less likely to be reported in the financial aspect, but generally live five to seven years longer than their male counterparts. Women are twice as likely to receive income below the poverty level after retirement, says Cruz-Myers. According to several reports, the average Hispanic women receive 52 cents for every dollar men earn wages. A lower payment means less cash to spare, Social Security checks, and reduced pension payments. Read the rest of this entry →

Social security schemes are facing new challenges. These challenges differ greatly from those faced in past decades and have many implications for funding. There is broad consensus on what to expect from social security schemes: the extension of coverage with adequate benefits.

However, this should be achieved while ensuring the financial sustainability of schemes in the medium and long term. This is a particular challenge for various areas of social security, especially for pensions due to demographic aging, and medical care due to an increase of associated costs. Of course, these challenges must be considered in the light of globalization and labor market increasingly precarious.

The ultimate goal of social security schemes is to pay benefits when due. Above all, this means enjoying a financial sustainability.

How is it funded social security?
The national social security schemes contribute to the social protection of population by redistributing a significant proportion of gross domestic product (more than 30 percent in some countries). This significant amount of resources consists of:
1. social contributions paid by employees, employers and governments;
2. government transfers (taxes and benefits for a specific allocation, general revenues and international loans);
3. other more recent provisions, such as micro, micro-credit schemes and community protection.

An investment in the future
ISSA studies in this field has shown that some countries have recently begun to build and expand reserve funds to ensure long term sustainability of their schemes and provide a safeguard for periods of difficulty, anticipated or not. Some countries that had progressively reduced its allocation schemes are now considering is the introduction of social pensions financed through taxes, should be the strengthening of the social insurance provisions. Finally, some countries are expanding coverage through the introduction of a number of basic benefits, also financed by taxes.

The key is a sound governance
The social security funds are increasing significantly. The environment in which they invest presents many opportunities and at the same time, a complicated context dominated by complex financial instruments and financial market crises. For social security institutions, it is a hostile environment in which risks hampering the investment of social security funds. Therefore, the social security institutions must remain vigilant and to minimize the risks associated with adopting sound governance structures. At the same time, they should ensure that revenue streams will result in sustainable social security schemes from a financial standpoint.

With the approval of the Financial Security Act by the plenary of the Legislative Commission, the banking sector is concerned and unhappy, as some representatives of banks believe that the force is put at risk the profitability of the banks and that envisions a reduction in the volume of deposits and a contraction in the placement of credits that could be reduced by average 70% next year. According to the Association of Private Banks of Ecuador (ABPE), the profits of many banks will disappear.

The general manager of Banco Pichincha, Fernando Pozo, adding that these reforms, “coupled with economic measures antitechnic the Government, form a set of elements that are isolated to articulate but can eventually attack the solvency of the financial system.”

Similarly, Cesar Robalino, chief executive of the Association of Banks (ABPE), held that this document is not a technical support “to enable the banks to work with total independence.”

Moreover, Pozo said it is a grave mistake for the Fund of the Deposit Guarantee Agency (AGD) is administered by the State, since income will consist of the shareholders of the banks, not the contributions of depositors. Therefore, “the regime has no right to intervene,” he said.

But the legal document is more specific in stating that “after the extinction of the AGD within 12 months and up to six months renewable, assets, rights and powers shall be executed by the Ministry of Finance.”

Robalino said that these reforms do not reduce systemic risks nor create confidence in the financial market, because “to use these standards should establish clear policies on interest rates, tax incentives and economic policies that encourage production and investment,” said .

At another point, the rule states that state investments, banking and Social Security (IESS) pass through transparent markets or stock exchanges. The holder of the APBE added that a “financial network misconceived and can adversely affect the resources of both depositors and to banks.” (APB)

Financial education is gaining importance in different parts of the world, the United States is even starting to provide financial education in schools, but these changes are just beginning and it will take much more widespread throughout the world for most people have to acquire financial education on his own.

Now where or how to get a solid financial education? good way of information and general financial education a person can learn the basics:

Commercial and banking law -Notes, checks, drafts, transactions, interests, commercial contracts such as leasing or lease as well as the establishment of partnerships and laws related to them.

Civil law -It is important for the characterization of the contracts and assumptions made in the law to a contract with certain gaps in it (in some countries when you do not specify the date or the duration of a usufruct contract law presumed to have been concluded for a period of 30 years).

Accounting and Administration -For insight into the mathematical implications of any investment or business (often in some people believe that business is making money but to bring good accounts realize they did not take into account taxes, transportation the goods and the rents and deposits it in the end losing out to winning) in fact the administration and accounting is perhaps the most important part of financial education and you can ignore the knowledge of other fields and leave forward but ignore the accounting and administration may lead to failure although dominate other branches of life. Read the rest of this entry →