What Is Executive Pension Plan

What Is Executive Pension Plan?

As the name implies, an executive pension plan is a tax-efficient savings plan designed especially for executives, senior executives, key employees and directors of a company. It is one of the best forms of pension schemes that enable the executives to get a tax-free income after retirement.

How does this work?

Executive Pension Plan is regulated by the Pensions Regulator. In most cases the employer pays into the plan, in others, both the employer and the employee pay in the plan. Thus a tax-efficient fund is designed for the employee. This is used to provide tax-free cash and a pension income to the executive after his retirement. Executive pension plans are similar to any other pension schemes in which they function as money purchase occupational pension schemes.

Normally, Executive Pension Plans (EPPs) are designed by the company directors for their personal benefit. But it can be utilized by their favoured key employees with the same levels of income that this investment can offer. In such cases, the pension fund is held up under a trust in which the trustees are responsible for the day-to-day administration activities like ensuring if the payment contributions and the payout benefits are maintained regularly. Under this scheme, each employee can have the liberty to retire early or to work past the company’s retirement date.

Benefits:

The executive pension plan has huge benefits for the employers when it comes to recruiting potential employees. Employers can attract and motivate the employees and reward them with EPP schemes based on their performance. Showering performance incentives for your employees can be a good idea. But still offering them a long term benefit, something which they could count on even after their active working years allows them to understand that they are your important business assets.

Another benefit of executive pension plan is that certain schemes are eligible for a top up. With an increase in the life expectancy of the applicant, topping up the plan can help in building a larger fund that guarantees a high level of income post retirement.

Moreover, the employees feel comfortable as most of the schemes do not require their regular contribution. Their company will contribute a particular sum of money that goes into their executive pension plan which will mature at the time of their retirement. This is the extra benefit from executive pension schemes that are more advantageous than other forms of plans. With this plan in hand, each employee is guaranteed of tax-free returns for the rest of their life. It also forms part of their main income source which they can depend on at all times.

When it comes to the retirement date, each employee can choose their own year of retirement. They can either choose to retire early or to work past the company’s set date of retirement. Whatever the choice is, the employee will still be able to enjoy a worry-free income for the rest of his life. All these advantages attract a large number of executives to sign up for a pension plan that guarantees long time tax-free income.

Which Type of Credit Do I Choose

Which Type of Credit Do I Choose?

Lots of us face this question if we’re in the position to access new credit, and that is what type of credit do you choose? There are several different types of credit extended in numerous ways. For instance there are charge cards which usually don’t set a limit BUT require payment in full every 30 days. Next you have your simple credit cards, where a limit is set and you’re allowed to pay that back in minimum payments if you so choose BUT you also pay lots more interest over time. There are some credit cards that offer 0% interest for your first 12-18 months so it’s best to know what to do. Then of course there is the mortgage for your home or personal line of credit. This type of credit or loan usually comes with origination fees along with interest that is paid back to the lender over time. Depending on what your current credit situation is these fees mentioned above could be higher or lower or irrelevant altogether.

Let’s discuss the Charge Card and Credit Card scenario. First off a charge card will allow you to spend what you need to on purchases. When the lender for a charge card issues credit typically there is no set limit, however they do closely monitor you’re spending to minimize their risk of loss. You do need to pay the credit used back at the end of every month in order to eliminate late fees or closure of the account. Credit cards play a different role. This type of credit issued by a bank or private lender has a set limit after signup. Meaning the lender will look at your credit score and decide how much they are willing to allow you to use before they feel you’re too high of a risk. Some of these credit cards start out low but can quickly have limits raised over time by showing excellent payment history. Remember you can roll this type of credit month to month as long as you don’t miss your monthly payments. Keep in mind you NEVER want to use more than 30% of your available credit. When this happens 2 key things happen:

1) Your credit score drops no doubt about it.
2) Your now looked at as high risk to lenders by using too much credit.

It certainly is a cat and mouse game on knowing how much credit to ask for and how much credit to use – believe me I know. It can be tough. You don’t want to fall into these categories it can be hard to dig out once you do.

Finally let’s talk about the personal loan or line of credit. I have seen this type of credit become what most folks go after; I assume they just heard something and don’t really get it. When deciding what type of extended credit you need the first question asked should be what do I need the line of credit for? There are a few distinct differences you need to be aware of. If you’re doing a home remodel or need to fix some landscaping or build a garage, do you know what type of credit you need to get? A line or credit will have origination fees, interest rates, additional fees and a set term(s) for repayment. This will be true for a credit card except you can get interest free credit lines for up to 24 months in some cases. You can also get a lower interest rate depending on your credit score. Also your ability to show lenders you can pay back the debt with no stress will certainly play well for your case.

Whatever road you travel in life it’s important to be informed. It’s important to do the research and fully understand the situation you’re getting into. I included in this, we all want things yesterday and rush into situations. When we look back we all understand it could’ve been better for us had we took a little more time and did a little more research. That’s okay. Doing nothing gets nothing. Don’t expect life to just present you the answers to your questions, you need to find them yourself. Don’t think you won’t understand or can’t know. We all have the ability to find out. I hope you find your answers. Don’t give up. Only a small percent make it because only a small percent put forth the effort. It’s not science its common sense.

How to Get Approval for a Home Mortgage Loan

How to Get Approval for a Home Mortgage Loan

If you are planning to apply for a home loan, check out the following helpful tips to get your application approved.

Know Your Credit Score

Credit activity and credit scores will greatly affect your mortgage approval. Lenders usually require minimum amount of credit score that should be maintained so that your conventional mortgage loan request will not be denied.

Also, having derogatory credit information might hinder mortgage approval. To avoid unwanted denial of your requested loan, you should lower your debts, pay bills on time, and fix errors on credit reports.

Save Your Cash

Mortgage lenders require down payments which depend on the kind of loan. If you have the means, pay a higher down payment. This will lower your balance and alleviates your private mortgage insurance.

Down payment is not the only fee you should be worrying about. Acquiring a mortgage also involves home inspections, title searches, closing costs, application fees, credit report fees and other fees. Save up cash for these payable fees.

Stay at Your Job

Changes on your employment and/or income status will have a major effect on the mortgage process. The information you provided in your application will be the basis of your home loan approval. Giving up a job to be self-employed or getting a lower paying job will make a wrench in the plans, leading to a reevaluation of your finances to check if you’re still qualified for the loan.

Pay Debt & Avoid New Debt

Qualifying for a loan doesn’t require that your credit card be zero balance. But, it’s better that you owe less to your creditors. Your debts determine whether you will get a mortgage or not. Also, it will determine how much you will acquire from the lender. When you have many credit card debts which makes your debt ratio high, the lender might refuse your loan request or provide a lower mortgage.

However, even though you get approval for a mortgage with debt, it is advised that new debt should be avoided while under the mortgage process. Before the mortgage closing, lenders recheck credit and when they found out that there are new debts they can stop the closing.

Have Pre-Approval for a Mortgage

Having your home loan pre-approved will help you determine what you can afford before bidding on properties and what interest rate should you be paying on the loan.

Determine What You Can Afford

Choose a home that will fit your budget. Though some lenders pre-approved applicants for more than what they can afford, be smart, live within your means and purchase a home that you can afford.

What Is Student Loan Rehabilitation

What Is Student Loan Rehabilitation?

Last year, a major change was made to federal student loans that are already in default loan status. Borrowers that have defaulted on these loans can now apply for something called ‘Income-Based Default Rehabilitation.’ While this new law doesn’t excuse a total loan amount, it does provide a much needed break for the thousands of students that were struggling with the default loan status.

Income-Based Default Rehabilitation Explained

Beginning on July 1, 2014, borrowers that defaulted on student loans were given a choice. They could either continue with the default status, or they could apply for Income-Based Rehabilitation. This type of rehabilitation takes into account a borrower’s current income, and offers a payment strategy consisting of 9 small payments (some could be as low as $5 per payment) in order to remove the default status from a borrower’s credit record.

Why This Law Was Enacted

At one point prior to this new law, a borrower had to pay a set monthly amount in order to get out of loan default. This amount could greatly fluctuate depending on the agency responsible for the loan. So while one borrower might pay $100 on a $50,000 loan per month, another borrower with the same amount of loan debt ($50,000) could wind up paying $300 per month. The amount set was established according to a law called ‘reasonable and affordable,’ but that rate was determined by the agency that held the loan.

Since these rates fluctuated so much from agency to agency, the government decided to step in and take a closer look at a person’s current income wage. A person that makes $30,000 per year cannot afford to pay the same, or more, than a person making $70,000 per year. Now, the Default Rehabilitation law exists, and this law really takes into account the total amount of money that you make. In other words, the payments that you will have to make in order to return to regular (non-default) loan status can be much lower than they used to be.

Worth the Status

If you have currently defaulted on your federal student loans, it’s worth taking a closer look at the Default Rehabilitation option. Why? Without applying for income-based payments while in default, your wages could be garnished and other things could happen to you based on your default status. While every state is unique, not paying back a federal loan that’s in default never works out well for the borrower (you).

How can you apply for Default Rehabilitation? This process is trickier than it sounds, and it does require some deeper understanding of the new law in order to make sure that you get fair payments based on what you can really afford. If you are currently in default status with any federal student loan and need help, your best course of action is to hire a lawyer that understands the intricacies of this process.

If you have defaulted on your federal student loans, taking a closer look at the Default Rehabilitation option may be in your best interest.