Benefits and Retirement Plans
Employee benefits are divided into two. Required benefits are those protected by law and must be compulsorily issued to employees without fail whilst optional benefits are those given by employers based on their personal initiative and decision. The following are some of the benefits that are required and compulsory by law:
Social security: Every employer is required to pay social security taxes to the government. This amount must be similar to what is paid by the employee and currently the rates stand at 6% for the employees and employers. In addition, social security is also encompassed in medicare and this is an extra 1.5% for both employer and employee.
Unemployment insurance: This is an employment benefit that is compulsory and is paid at state level. In order to pay up for this tax, one must register their business with the owner’s nation’s workforce agency (Beesley 45) and pay the tax to the location they are situated at.
Workers’ compensation: Also referred to as disability benefit, this mandatory benefit is normally paid by employers to employees who become disabled due to injuries or illnesses that are caused by occupational hazards or accidents. Different countries offer different mandates and regulations regarding this benefit. Currently, employers are required to purchase disability benefits if their workers are situated in New York, Rhode Island, Hawaii, California and Puerto Rico. Nevertheless, employers can opt to offer private benefits if their employees are from other countries and areas other than those mentioned above.
Family and medical leave: Even though regular vacation leave is usually not a compulsory benefit, employers who hire more than 50 workers are compelled to offer leave in accordance with the Family and Medical Leave Act. This mandates that employers provide 12 weeks of work protected, in addition to unpaid leave in any 1 year period to every eligible and covered employees. Such leave can be provided on grounds such as personal healthcare, child care, birth, or immediate family care.
Optional employee benefits
The following benefits are optional and provided depending on the employer’s discretion:
Leave benefits: The federal law does not compel employers to offer most of the common leave benefits. Employers choose to offer these benefits including vacation/holiday, funeral leave, sick leave and personal leave as part of compensation plans. However, the Family and Medicare Leave Act makes it compulsory for employers to provide leave (not leave benefits) to employers.
Healthcare insurance: Again, federal law does not stipulate that employers must give health and life benefits for their employees. Although, some employers at their own discretion may grant full provision of health care benefits, most prefer the co-payment basis that are paid by both employees and employers (Mikhitarian 12).
Paid holidays: While this type of benefit is not enforced by federal laws, it is offered to employees depending on the employer. It basically entails offering full payment for employees who do not work during holidays and full pay premium pay for those employees that work during holiday. Employers who offer paid holidays choose the periods within which the holiday is given.
I regard health care insurance as the most important optional benefits because it indemnifies one during unpredictable circumstances and also helps people to access medical care that can help them improve their health. There is assurance of obtaining relevant treatment in case of health concerns. in particular it is important for children to get both preventive medical care such as immunization and actual treatment for different ailments. By getting access to preventive medical care, adults can also be able to detect health problems early and arrest them before they escalate. Health insurance can guarantee access to both preventive medical care and treatment of actual ailments. It is advisable for people who work in construction jobs, factories, driving jobs and other hazardous jobs to take health insurance because they tend to be susceptible to accidents and health problems (Boutwell 23).
Organizations usually provide their employees with varied forms of retirement plans and these are the fringe benefits that help to retain employees. In some cases, these retirement benefits come with extra tax benefits and offer retiring employees income after retirement. Retirement benefits vary with each organization and are dependent on diverse factors such as the size of the organization and the age of the workers on average. Retirement plans can include any of the following:
The 401 (k) is retirement plan through which employees are allowed to make pre-taxed payments towards a viable retirement savings plan which earns them interest. However this interest is not constant until when withdrawn and in most cases, the employer usually matches up what the employee pays. Saving options under this retirement plan may range from company stock, mutual funds, money and bond market funds, with options for the employee to change the distribution frequencies and plans of his or her savings at selected intervals (Shah 59).
This is a retirement plan which organizations such as public schools and churches prefer. Although it is similar to the 401 (k) in one way, it offers more tax exemption. Employees make tax deductible payments which are then matched by the employer to a specific percentage. The money grows on a tax deferred basis just as is the case in 401 (k) retirement plan. an organization can offer a 403(b) plan that works in similar way to a 401(k).
In the profit sharing plan, employees save up for retirement by investing part of the organization’s profits and sharing this wealth. The employer decides on the amount of funds that can be contributed by the company towards the savings plan but this is determined by the income of the workers. On their part, employees do not make any contributions towards this plan.
Get professional academic writing help with EssaysExperts.net.We are the best in the field to help you achieve good grades.Place your assignment with us and enjoy your success.
Beesley, C. Employee benefit plans: what law and what’s optional. 7 May, 2009. Web 4 November, 2013.
Boutwell, S. Fixing broken retirement plans under the new IRS procedures. Journal of financial services professionals (2013): 67-23.
Mikhitarian, C. & Wukitsch, J. Revisiting contributory defined benefit plans. Retirement security journal (2001): 57-12.
Shah, G. Incorporating employee heterogeneity into default rules for retirement plan selection. The journal of human resources (2012): 199-57.