We all have limited time to spend in this world. With an average lifespan of 70 years worldwide, we can easily identify that we spend most of our time working to make ends meet. From the age of three, when activities like schooling begin, people are always busy till the time comes when they finally have to throw in the hat and rest for the remainder of their life. However, nothing in this world is free, and we all need money to live peacefully after retirement. That’s where the post-retirement benefits come in.
Post-retirement benefits
The post-retirement benefits are generally offered by companies to their employees who have worked with them for a very long time until their retirement. This lifetime work makes them claim a few advantages that can help them live their remaining life comfortably. The post-retirement benefits can sometimes cover the retired employee’s immediate family, like the spouse or the children who have not reached a certain age.
The post-retirement benefits are usually paid for by the employee themselves to the organization they have worked for. Employees typically pay through deductions from their paycheck every month, which goes towards their post-retirement benefits plan.
The first benefit is a pension. A pension can be a monetary compensation that is paid to them every month after their retirement. Another form of pension can be non-cash benefits. These benefits include things like medical plans and/or a life insurance policy. Benefits sometimes also have other things like dental, vision, tuition, and legal services.
Who cannot avail of post-retirement benefits?
Even though post-retirement benefits are important for living without worries, but some employees are not eligible for post-retirement benefits. Employees who resign or leave the organization before they reach the time served to qualify for post-retirement benefits will not receive those benefits. Some employees who do not want to leave the company, but are otherwise terminated are also not eligible for post-retirement benefits. Terminated employees are instead given termination benefits, which can be monetary like a severance package.
What are the pros and cons of offering Post-retirement benefits to employees?
If you `are an employer, then setting up a post-retirement benefit plan for your employees may have a lot of benefits for your company as well. However, there might be a few minor downsides to it as well. Here are the pros and cons of offering your employees post-retirement benefits.
Pros of Post-retirement benefits
- The first benefit to offering your employees post-retirement benefits is that the money raised through the employees’ contribution to their retirement plan is not subjected to any form of taxation. This takes the worries away as employers have tax-free funds available at their disposal and can be used by the company when needed, provided it is returned entirely.
- An employer can also receive a tax-deductible based on the contribution it puts forward to the plan. The higher the contribution, the higher you save money on taxes.
- A post-retirement plan can also be a huge motivator for your employees based on your company’s profits. This will help boost the productivity of your employees.
- Companies that offer post-retirement benefits also have an edge in attracting potential employees over other organizations.
- The cash in the post-retirement benefit plans can also be used if there is a cash flow problem.
Cons of Post-retirement benefits
The cons of setting up post-retirement benefits typically lie in the short term. They should not persuade you to not consider offering them if you are serious about your company for a long time.
- The major disadvantage of setting up a post-retirement benefit plan is that it is costly and time-consuming at the start. You might also need extra assistance from professionals to help you set it up, which can be a considerable cost for your company.
Conclusion
We hope that now you are seriously considering introducing a post-retirement benefit plan in your company. They can be perfect for your company or organization if appropriately administered. However, they can be a pain initially and will be very costly in the short term. However, once you introduce the plan your employees will also be a lot more motivated to work for a company if they see that their retirement is safe and secure.