How Does a Retirement Fund Work?

Your employer’s retirement savings plan is an essential part of your future financial security. It is important to understand how your plan works and what benefits you will receive. Just as you would keep track of money that you put into a bank or any other financial institution, it is in your best interest to keep track of your retirement benefits.

Those responsible for the management and oversight of your retirement plan must follow certain rules for operating the plan, handling the plan’s money, and overseeing the firms that manage the money. You should also understand and monitor your retirement plan and your benefits.

The first step to understanding your retirement benefits is to find out what kind of retirement plan your employer has. There are two major types of plans: defined benefit and defined contribution. Keep in mind that your employer may have more than one type of plan and may have different participation requirements for each.