Arrear is a financial term that means unpaid money after the scheduled time. It can happen because of delayed payments, adjustments, or changes in salary/pension amounts. Employees and retirees need to understand arrears types and calculation methods to manage finances.
Salary arrears are unpaid wages that an employer owes to an employee for work done during a specific period. This can happen due to administrative challenges, payroll processing delays, budget limits, or mistakes in calculating compensation.
Pension arrears are unpaid retirement benefits that are overdue. They happen when the pension amount is not disbursed on time as per the agreed-upon pension plan.
Pension arrears can arise due to various reasons, including administrative issues, disputes, changes in pension rules, financial constraints faced by the pension provider, or errors in processing pension payments.
While both salary and pension arrears include outstanding dues, there are important distinctions between the two:
Understanding arrears, whether salary or pension-related, is crucial for both employers and employees. In addition to this, managing your finances is also important to keep good financial health, and platforms like Fi Money can be your helping hand in this. As a money management platform, Fi offers several investment options. Be it Short-term or Long-term — it's easy to invest with a simple swipe of your phone's screen. Fi also offers a Peer-to-Peer investment feature called Jump that helps beat inflation! Jump helps you earn up to 9% p.a on your investment.
"Arrears" in finance refers to overdue payments or financial obligations, such as late loan payments, unpaid salaries, debts, and past-due invoices.
There are mainly two types of arrears: salary arrears and pension arrears. Salary arrears may occur due to delayed payments, bonuses, or administrative errors. And, pension arrears arise from delayed or unpaid pension benefits.
Salary arrears differ from pension arrears in terms of beneficiaries and types of payments. Pension arrears affect retired workers or pensioners who have not received full pension payments, while salary arrears impact current employees who have not received their full remuneration. Both types of arrears can cause financial burden, but pension arrears can also undermine retirees' financial stability, making it difficult for them to pay for necessities and affecting their quality of life after retirement.
Here are examples of arrears in different industries or sectors:
Arrears are usually calculated by identifying the pending or overdue amounts for specific periods and summing them up. To resolve arrear-related issues these things need to be followed:
