Offering Employer-Sponsored Retirement Benefits: Pros and Cons
As retirement plans can be a great addition to an existing compensation package and improve the future of employees, it is important to understand the pros and cons of offering such coverage. While navigating the complexities of retirement plans and its benefits, Fiduciary Liability Insurance can help to mitigate any potential missteps and protect against litigation.
There are numerous benefits to offering retirement packages. For small business owners, in particular, offering a retirement plan as an employee benefit allows the owner to take advantage of the plan, as well, according to Biz Filings. Some other benefits include:
- Tax advantages are granted to those businesses that offer retirement packages to employees.
- Enhanced productivity and profits if the plan offered is based on the company’s financial success.
- A sound retirement package can help to attract and maintain qualified candidates.
- Retirement plans can help supplement compensation in the event the business has little cash or high starting operating costs.
Although these are valid reasons for offering this coverage to employees, there are some inherent cons to these plans. First, setting up these packages and administering a plan can be quite expensive. In addition, these plans are complex and require professional oversight, and hiring the required assistance can also add to the business’ expenses. In turn, some companies, particularly smaller ones, often forego the coverage altogether.
When developing a wage and compensation package for employees, it is important to weigh both the positives and negatives of offering a retirement package. Depending on the financial status and size of the company, each one of these points should be considered.
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