What Does pension Mean
The adjective pension is not part of the dictionary of the Royal Spanish Academy (RAE) . In any case, the use of this term in our language is frequent. It is a concept that is linked to forecasting (the current availability of resources to meet a future need that can be anticipated).
The state structure that seeks to provide protection to people who, for various reasons, are not in a position to earn a living through work is known as the pension system .
What the pension system does is provide resources through retirements or pensions . In this way, the person who receives the retirement or pension has money to satisfy their basic needs.
The pension system, in this way, gives money to people who, due to age reasons, can no longer work and, therefore, are retired. It also pays a periodic sum to individuals who, due to a disability , are unable to join the labor market and to the widows or widowers of a person who has worked or received a retirement until the moment of death.
In theory , the pension system can take care of itself. Working individuals contribute part of their income to the system so that retirees and pensioners receive their assets. In the future, the same worker who made these contributions will receive money even if they no longer work.
It should be noted that the pension system can count, if the law allows it, with the participation of private entities . In these cases, the active worker makes a contribution to a fund managed by a company, which makes investments to obtain eventual profits. At the time of retirement, the person begins to collect according to the amount collected in his account.
Pension balance
In the field of accounting, a pension balance is understood to be the state that reflects the financial situation of a company at all times. Its structure is formed by means of two concepts that are developed in groups of accounts representing the various elements of heritage, as can be seen below:
* Assets : he includes all the accounts in which the securities that the company has at its disposal are appreciated, although these are not necessarily owned. In short, the Asset serves to know the investments that the company has made ;
* Liabilities : it is made up of all the accounts that reflect the method of financing the Asset, that is, if it is obtained through debts or own means. By carefully observing the Liabilities we can know where the company has got the money;
* Working capital : it is the capital that the company needs to carry out its business. This includes the payment of taxes, wages and salaries, social security, services such as electricity and drinking water, payment to suppliers, and office and equipment rentals.
The pension balance shows values that are grouped by alternative items, according to whether they represent Profit or Loss . When a loss occurs, the value must be placed in the Assets column, while in the opposite case the Liabilities column is used. It is important to note that any error in one of the registers, no matter how small, can lead to big problems if it is not detected in time . Although computer science makes constant and more exhaustive control possible than paper, reviews must be constant.
Experts recommend the use of a Balance Sheet for the start of the venture and for each fiscal year that has an Income Statement at its disposal. In addition, the minimum term that is advised to be reflected in its columns is three years, counting from the beginning of the activity .