Pension Payments

By: EconomyWatch   Date: 6 October 2009

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Pension payments are made four weeks in advance to the assigned bank account. In most countries, the pension is disbursed on Mondays, except public holidays. Pension payments are in-line with state laws and the pension scheme one chooses to invest in. For state pension schemes, payments increase every year in relation to the national price index inflation rate over the period of the last 12 months.

Method of Pension Payments

Pension payments are credited straight into the employee’s bank account. The bank transfer method reduces the hassle of processing cash or check to the employee’s residential address and eliminates the risks associated therein. The employee can choose any bank account to receive pensions at the time of applying for payments. Pension companies make sure that the account is credited on the day the monthly payment becomes due. On special request, the pension can be credited to an overseas bank account if the employee begins to live in a foreign nation after retirement. However, a small processing charge is deducted from the payment.

An individual should apply for receiving pension payments up to three months in advance. It will not be started automatically as the person retires from his or her job. Obtain information about conditions of payment before applying for pension benefits.

Pension companies notify a change in the pensionable pay figure due to policy changes. They affect calculation of an employee’s pension awards. At times policy changes result into pensions increases if the best year of pensionable pay is later as per new calculations. In such a situation, pension companies notify the individual regarding excess payment and ask to arrange for repayments within a stipulated time period.

An individual receives pay slip for the first pension payment. Later, s/he will receive an annual pay slip.

Pension Payments: Missing Payments

In case of a missing pension payment, an individual has to take following course of action:

·        Ask the bank authorities to locate the payment and rectify errors, if any, at their end.

·        Contact the state pension authorities immediately

·        Contact the pension company in case of a private pension scheme

Pension payments are treated as a source of income and are taxed in most countries. However, one can make voluntary deductions, such as premiums for health insurance or state savings accounts, to earn tax rebates.


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