The agreed deposit method is that the enterprise shall, in accordance with the provisions of the retirement measures, withdraw a certain amount of retirement fund every year and hand it over to the trust institution for safekeeping and use, and pay the retirement fund belonging to the employees to the retired employees when they retire. Usually, the fixed fund is withdrawn according to a certain proportion of the employee's salary (such as 5% of the salary) every year. The pension that employees can get when they retire depends on the amount deposited and the interest generated, and the enterprise does not guarantee the amount of pension payment. The amount of pension withdrawn by an enterprise in each period is the pension cost that should be confirmed in the current period. The accounting treatment of the agreed deposit method is relatively simple. When withdrawing, you can debit the pension cost and credit cash, and there are no other entries. Most enterprises in our country adopt this method.
The agreed retirement payment method is that the enterprise promises to pay a certain amount of pension in one lump sum when employees retire, or pay a certain amount of pension in installments when employees retire; As long as the enterprise has the ability to fulfill the obligation of paying pensions when employees retire, it is up to the enterprise to decide whether to withdraw pension funds on time. Under this method, the amount of pension is usually determined according to the employee's salary level and service years, or both or only one of them, such as service years. The former is called the final wage method, and the latter is called the fixed payment method.