From the course: Human Resources: Compensation and Benefits
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Retirement
- As a manager or employee, two big concerns are that you have enough money to retire, and that it will last for as long as you live. So, most employers offer one or more ways for their employees to accumulate tax deferred savings. Employers get tax deductions for contributions to their employees retirement accounts, and employees can make tax deferred contributions to those accounts. Let's review the major features of two of the most common types of plans. Traditionally, most big corporate plans have been defined benefits plans under which an employer promises to pay a retiree a stated pension, often expressed as a percentage of pre-retirement pay. For long serving employees, that amount is often about 50%. Today, only 20% of Fortune 500 companies offer traditional pension plans to salaried new hires. The move away from them has been fueled by several factors, including a desire to manage retirement costs, a more mobile workforce, government and accounting regulations, and global…
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