1 / 12

Retirement and Benefit Plans

Retirement and Benefit Plans. Chapter #11. Retirement Plans. Three ways firms can establish pension plans. 1. Defined benefits plan A quantitative amount, Unit formula =% of pay X # of years of work Flat formula=% of final yearlty average of salary

tocho
Download Presentation

Retirement and Benefit Plans

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Retirement and Benefit Plans Chapter #11

  2. Retirement Plans

  3. Three ways firms can establish pension plans • 1. Defined benefits plan • A quantitative amount, • Unit formula =% of pay X # of years of work • Flat formula=% of final yearlty average of salary • 2.Defined contribution plans • Both er and ee contribute • Funds are invested..not guaranteed • Fiduciaries manage accounts • 3. Hybrid plans • Combinations • New….Cash balance plans. In order to recruit more mobile younger workforce

  4. Firms get tax breaks for pension plans ERISA Title I and II

  5. Erisa sets • Minimum standards that must be met before tax deductions • No discrimination between highly paid ee and lower paid ee • No discrimination age race color gender etc. • Contribution to retirement plans have decline over the last 15 years down to 42% since 2006. • Less manufacturing wage earners • More doing defined contribution (401K)

  6. PBGC Pension Benefits Guarantee Org. • There to guarantee pensions to retired employees if a firm has financial problems or goes bankrupt.

  7. Pension plans have to qualify • Look #261 #262 • 1. EE must be over age 21 to participate • Ratio test • Lower paid employees must not be more than 70% of total • Vesting rules • Cliff vesting schedule, ee vested after 3 yrs • Look at 13 qualifiers • Accrual rules. Firm must specify how much money can be earned by participants • Safe harbor rules….no preference to highly paid ee

  8. Healthcare Insurance Programs • Premiums are paid by er and ee • USA has multiple payer system • Universal pay system or single pay • Government regulates ( Canada • Origins of Health Insurance • 1930….Great depression • 1940…Prepaid premiums on monthly basis • 1965 Medicare • Do you believe that healthcare is a fundamental right to all US citizens?

  9. HMO Act 1973 • Idea is to keep ee healthy to reduce absenteeism and increase productivity and to increase retention • 52% of firms have some kind of coverage (2006) • Group coverage..annual premiums • Experience ratings • Copays • Primary Care physicians

  10. Fee For Service Plans • Ee pays then gets reimbursed by er. • Indemnity plans • Contract between er and insurer • Self funded plans • Firms set aside money in advance for health care for ees. Does not have to pay premiiums • Depends on financial strength of firm

  11. Types of medical benefits • Hospitalization • Surgical • Physician benefits • Terms to know • Deductibles • Coinsurance • Out of pocket Maximums #look278 • Preexisting conditions • Preadmission certifications • Second surgical opinion • Maximum Limits

  12. Do you know the difference? • HMO • Er pays annual fee to med insurer • EE pay copay • Primary care physicians • PPO • Choice of doctor from network • Higher deducts • POS • Ee can go outside network but pays more • FSA Flexible spending accounts

More Related