Pension plans must use a new method for the calculation of the commuted values as of 1 December 2020.

Plan members who transfer the commuted value (CV) of their Defined Benefit (DB) plan could soon receive reduced payments thanks to an updated formula that will come into effect on 1 December.

Some DB plan members, particularly those approaching the plan’s normal retirement date, may experience a relatively small decrease in their CV. However, those who leave or retire around the age of 40, and do not have many years of service, may see their CV payment reduced by 5% or more, depending on the characteristics of the plan. In a February announcement published by Eckler SA, an actuarial consulting firm, it was estimated that changes to the retirement date assumption in the revised December formula could reduce CV payments for people aged 45 in a DB plan with a normal retirement age of 65 by 4% to 7%.

The new formula was developed by the Actuarial Standards Board of the Canadian Institute of Actuaries after a multi-year review process and is expected to enter into force on 1 August 2020. In April, at the beginning of the closures due to COVID-19, the institute announced that it would postpone the deadline to 1 December 2020. Some plans were permitted to adopt the revised standard early.

The new formula uses a revised assumption for the start of the retirement date and a market-based interest rate calculation that reflects not only Canadian government bond yields but also information on the performance of provincial and corporate bond indices. The impact of these two key revisions on the lives of plan participants depends on the age of the plan participant, the bond indices used to calculate the difference, the economic conditions at the time of calculation, and the terms of the plan, as indicated in the Eckler communication.

For plans without early retirement benefits, the change may only have a minor impact on CVs, but CVs will generally be lower under the new rules for early retirement planning. The more generous the benefits, the greater the reduction.

Members of the DB plan who terminate their employment often have the opportunity to remain in the DB plan and regularly receive pension payments upon retirement, or to transfer the CV from the plan and use it to purchase an annuity, or to take it as a lump sum – where part or all of the amount can be transferred to a locked-in retirement account.

Plan members who have recently requested a quote for the CV of their earned pension, but have chosen not to commute their pension until the new year, may find that their CV has decreased due to changes in interest rates and assumptions.

The decision to take a CV from a DB plan is complicated and very personal. It can be one of the most important financial decisions you make when buying a house. When interest rates are low, as they are now, CVs are high, making the decision to transfer a CV a potentially interesting option. However, the amounts withdrawn must be properly invested to create future retirement income. This is unlikely to be achieved by using GICs or other “guaranteed interest” investments, as they are currently paying less than the rate of inflation.

It would be perfectly normal for your risk tolerance to be lower in retirement than it was at the beginning of your career. A more conservative investment mix will produce a lower rate of return over time, but if you are sufficiently diversified, you should expect a return that regularly exceeds inflation.

In addition, usually only part of the commuted value can be transferred to a locked-in retirement account, while the rest may be subject to immediate taxation. If you do not have sufficient RRSP room to offset part, or most, of this excess, you may have to pay some income tax due to this choice.

Opting for a CV may be suitable for plan members who have at least a “balanced” tolerance of investment risks, who do not have a spouse, who have a shorter life expectancy, who receive a relatively low pension, or who have another DB pension income – whether their own or their spouse’s pension. Taking the commuted value of another pension may allow a couple to diversify between pension income and locked-in RRSP investments.

You want to make it easier for the customers to make payments for the purchases they make from you. As we all know that online payment processing is the fastest and safest way to receive payment, it can help propel your local business forward. But do you know how to make the right pick when choosing the merchant payment processing partner? You can start by asking the right questions.

Are there different rates or fees associated with different types of cards?

When you are planning to receive payments online through the credit or debit cards, you want to be sure that your payment processing partner is being transparent to you. Some service providers may charge different processing fees for different types of card transactions. For example, the charges for business card may be different to the debit or credit cards. So, it is very important that you know everything about what you’ll be paying to process each type of transaction.

Does the gateway support different countries and currencies?

Not all payment processing gateways are the same. While some can support only a few countries and currencies, others can offer many options to receive payments from different countries and in different currencies. In case you are doing business with international brands, then choosing a partner with international support should be a good choice. On the other hands, a local business can pick a partner that is working with a particular country and a particular currency.

Do you offer fraud protection for payment processing?

We are living in this highly advanced age where cyber hackers are always looking for the potential platforms to commit financial crimes. They can steal the financial information of your customers to make more revenue. All this can result in damage to your brand image. This is why it is very important to know that the merchant payment processing partner is offering fraud protection for payment processing so that your financial details and transactions are secure from any kind of attack. This includes using the best encryption methods and data protection strategies.

How can your payment processing help my business?

Well, this is something that can make or break the entire decision. Of course, a merchant payment processing partner will aim to help accept an additional form of payment, which can boost your revenue, but there are many platforms that can help in many other ways. It depends upon you, whether you need just a partner that can help accept payments or a little more than just accepting online payments. You can choose the agencies that offer a variety of features to help run smoother.

Do you have discount offers for online payment processing?

Of course, you want to know about the hidden fee or charges that you would pay to the payment processing partner, but did you know that you can save more on every transaction with the discount offers? Well, there are different kinds of discounts like Level 3 discounts that are customized to save more for the small and medium businesses to grow in this highly competitive marketplace. So, make sure to know the kind of discount offer the partner is offering so that you can make the right pick.

What type of support is offered?

When you partner with a professional merchant payment processing agency, you don’t just get the reliable online payment processing facility, but a lot more than that. You can have a whole team of experts who are available to help deal with the grievances that you can have with the online payments. Remember that an automated phone system isn’t the same as speaking to a live person, so make sure that you have the partner that can help deal with all kinds of queries you or your customers may have in the mind.

Is there any limit on monthly payment transactions?

Whether you are a small business owner or have a medium-sized agency that aims to grow, you want to ensure that you do not have limited options when it comes to receiving payments online. Of course, you’d not want to tell your customers to pay cash just because you are not getting enough transactions monthly as per your plan. So, it is very important that you pick the best agency that can offer you unlimited online payment transactions as part of the plan. Opt for the partner that is flexible enough to fulfil your needs for the online payment processing services.

Final words

Choosing the best online payment processing partner can be a challenging task, but it is very important that you reach the final decision with all the clarity in mind. With the above-mentioned list of the questions, you can make the smarter choice.

Investing in ESG Funds are considered to be ‘sustainable’ investing. They are essentially schemes that invest into companies that rank high on environment, social and good governance practices.

ESG schemes gained popularity since 2018 in India. While there are many ESG funds in the market, the Quantum India ESG Equity Fund is one such fund that was the frontrunner in the market. Since then, several players have entered the market. As per AMFI data in December, 2020, the combined assets under management of existing ESG funds in India are at Rs. 9,516 crores.

Socially Responsible Investing (SRI), was the predecessor to ESG mutual fund. Investors are beginning to recognize the importance of weighing both financial and non-financial metrics while making investment decisions. They well understand that lack of foresight on risk and responsibility management eventually translates into lower profitability and valuation. ESG investing aims to achieve the triple bottom line that is good for the people, planet and profits. ESG investing allows investors to express their own values and to ensure that their savings and investments reflect their preferences, without compromising on returns.

Mutual funds that incorporate ESG screening criteria in their equity selection prove to be better long-term custodians of investors capital, provide downside protection, and generate better long-term risk-adjusted returns for your clients.

it is important to evaluate where the companies that the equity scheme invests in faces the risk on account of ESG parameters, as ignoring these risks can have far-reaching consequences.

One might argue that responsible investing is just a passing trend. But a closer look at how the trend has gained momentum over the past 15 years suggests otherwise.

How to invest in ESG Equity Mutual Fund

While ESG equity investments should be on your investment portfolio, it’s best to invest in equities in a staggered manner to counter uncertainty and average out the cost of buying.

This is where systematic investment plans (SIPs) in mutual funds can help you make a disciplined investment route of investing in mutual funds.

After the Indian Government introduced the Digital India movement in 2015, they have started installing systems to accept online payments. It has reduced the hassles of the public and given them a sense of relief. All their transfers are handled digitally through websites and apps.

A merchant can now receive all the customers’ payments for the products and services delivered through an online payment gateway. These systems are integral for businesses and brands to differentiate their products and create customer loyalty. It has also allowed merchants running online firms to no longer establish direct relations with acquiring banks.

The following are some points to consider before creating the account:

The payment mode: A larger pool of payment options means customers can get various choices to check out and purchase comfortably. Many payment gateways are accepted all over India, such as debit, credit, and prepaid cards. Most of the leading banks and card networks have connections, including MasterCard, Visa, American Express, and Rupay.
Merchants can also use other options for receiving payments such as net banking, Unified Payments Interface (UPI), digital wallets (PayTM, Paypal, Freecharge, etc.) and Pay Later Cardless EMI. Customers take credit on their payments for services.

Swift onboarding experience: Many payment gateway platforms promise onboarding within a few minutes but opening a fully functional account could easily take over two days. There are various formalities attached with a payment gateway that requires verification before activation. To ensure not to have poor onboarding experience, confirm these details first-hand.
International payment support: For merchants having customers outside India or Indians using international cards, it is vital to support global payments. Most of the banks and payment gateways ask for a security deposit and a fee. Customers outside India pay in their local currency to know the exact amount and use PayPal to support multiple currencies with easy conversions.
Payment settlement cycles: Settlement duration is the time taken by the buyer’s account to debit funds and credit to the merchant account. The seller receives the funds after the customer enters the payment details in the gateway. It encrypts the data and securely sends it to the bank for authentication. The fund flows from the bank account to the seller’s account through the payment gateway.

Sometimes, even some of the best retirement plans that you’ve worked very hard at achieving are subject to certain unforeseen risks or loss. After witnessing the 2008 financial stock market meltdown, whatever retirement savings accumulated over the years could get wiped out, high inflation rates could eat away at your hard earned savings faster than you planned, with rising life expectancy raising longevity risk, people post retirement may outlive their investments and their accumulated money may not be enough to sustain the desired lifestyle due to personal situations, health care costs which are a few of the unknown.

The one thing that is inevitable is risk – decline in value of an investment during investing. As an investor, one would need to take into consideration the different risks that one may face and how to manage it. Keeping this in mind, making wise investment choices could help diminish risk in a way that helps you reap rewards.

The aim, of course, is to decide the right balance of solutions given the risks that you may face post retirement. For some of you, reviewing and rebalancing your investment strategy may be important, for others, investing less into equities while investing more in safer instruments could be important and for the rest, investing only in safer instruments may be of utmost importance. Nonetheless, for those of you reaching your retirement life or may have already entered that phase, it is important to understand the types of risks that lie ahead and how one may overcome it by protecting their retirement kitty and letting it continue to grow.

Let us look at the different types of risks that you may come across and what solutions you can take to make sure your retirement corpus outlives you.

#1 – Inflation

Inflation can have a big impact on retirees especially those living on a fixed income. Even though various financial responsibilities such as taking care of children’s education, feeding a big family become much lesser, however, other personal duties such as food expenses, paying housing bills cannot be ignored. It is important to know that inflation can affect different commodities differently; food and fuel prices are likely to fluctuate daily, along with volatility. For example, if you have set aside Rs. 3,00,000/- per year for your retirement, you’ll still have the same amount of money – but its value will not be much due to inflation. The Rs.50 toothpaste that you buy today will cost you Rs.80 in 5 years. The value of your retirement corpus will get depleted if inflation is not taken into consideration.

#2 – Interest Rates

The interest rates of savings accounts are already touching the floor. With banks offering lower interest rates, it would be a complete dampener for those surviving on fixed-income investments. Senior citizens and retirees who depend on income from their investments are the ones who are impacted.

#3 – Unexpected Health Care Costs

Due to advances in medical science, there is a general increase in the lifespan of individuals which leads to higher medical expenses that you may not foresee well into your retirement life. The post retirement phase could be as high as 30 to 40 years. Any financial plan should assume long living phase. Unexpected health care costs are a major concern. Long-term health issues such as an accident, illness, chronic disease, cognitive impairment can drain your savings when mental or physical capabilities deteriorate. Ignoring such issues and failing to plan adequately for post-retirement phase may not allow individuals to amass sufficient funds with which one can accomplish all their dreams and enjoy a peaceful retirement life.

A Fund to select part of Asset Allocation Post Retirement

Select Multi asset – Fund of Funds scheme that invests judiciously in a mix of 3 asset classes – Equity, Debt and Gold. This unique combination brings together the volatile equity assets with other relatively less volatile asset classes in the portfolio which is called as asset allocation. Multi Asset helps those investors who are moving closer to retirement or retirees who cannot afford to take high risk investing in equities, but are ok with some amount of moderately high risk to earn an additional return over fixed income with some market risks. While investing in Multi Asset Fund, you can give maximum opportunity to your money to grow during your retirement phase as this fund invests in all 3 asset classes.

Conclusion

Post retirement, earnings come to an end. Many retirees want to follow their hobbies or travel to their dream destinations. It is important to let your regular income continue post retirement to fulfill those dreams but it is also equally important to not let that income erode due to inflation, interest rates or unexpected health costs. If you wish to grow your money and you have some amount of risk appetite, you can look at equities. Remember, asset allocation always plays an important role in the kind of returns your investments generate. Our objective of this article is to help you allocate your assets wisely by keeping risk under control and grow your investments to help you manage your post retirement financial needs. And this can be easily achieved by investing in Multi Asset Fund.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Having an own home is a basic requirement of any human being. The basic idea of a home has had different meaning for people over the centuries and has seen constant change. In the prehistoric times having a home meant a cave to shelter from the elements of Nature. With the evolvement of time came the need for solid homes built from stone and mud which later became bricks and cement. As science developed so too did the needs of man extending to a need for a home which will be the envy of the neighbours.

Modern life has seen the demand of luxury houses reaching a level never before seen in history. A luxurious home with all gadgets which modern technology has now produced has become every persons dream. However, this is easier said than done as building your dream luxury home can take a great deal of money in these modern-day times. With the population explosion taking place in India there is more pressure on land mass and land is a commodity which is becoming scarce and expensive. The last two decades have seen an unprecedented boom in property prices all over India. The prices of building material have also gone up significantly and now to build an own luxury home is a very costly exercise with the cost of land, material, architects and civil engineers, labour and what not.

The solution has been presented in Faridabad in sectors 85 and 86 by private builders. Private builders have stepped in to start the construction of f Luxury Builder Floors in Faridabad sectors 85 and 86. They have purchased land in plot sizes of 250 Sq. Yards, 350 Sq. yards and 500 sq. yards. The structures on these floors are in the format of Ground plus four floors. The residential units for three floors are generally of 3 BHK or 4 BHK with a servant’s quarter included. The luxury floors in Faridabad are being built as completely independent units with the best quality of construction material.

Wooden Tiles and Vitrified Ceramic Tiles of best quality are being used for the floors.

The Kitchens are modular with the latest electronic gadgets like Micro Ovens, Chimney hubs, Cooking ranges of best quality, Refrigerators
Fancy light fittings, fans in all rooms
Air conditioning in all the living spaces. Some are even providing central Air conditioning units for entire floors.
Cupboards in all the rooms with best teak boards
Wooden door frames and windows.
Bathrooms with the latest designer sanitary ware and fittings by companies like Jaguar
Marble and granite counters in kitchens and bathrooms
Lifts in the structures
Personal parking
Power back up for lifts and also for the flats with generators already installed.
Water supply for 24 hours a day
Every conceivable comfort is taken care of. A buyer just needs to move in with this personal clothes and effects and just start a comfortable life without hassles.

The location of these Independent Luxury floors is very convenient as these are well connected to the Capital of Delhi and in a very green and comparatively pollution free environment. It takes 15 minutes to reach the floors from the Badarpur Faridabad border. The nearest Metro station is just 5 to 10-minute drive from the floors and the international airport is just one hours drive via the Faridabad Gurgaon Expressway.

There are a number of high-class schools in the surrounding area and so the connectivity to the educational infrastructure is also great.