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An Employer’s Guide to Retirement Plans

February 18, 2014 by  

Based on a study by {Hewitt Associates} in 2004, majority of the employees from mid-sized to large companies in the United States said that health insurance benefits are more important than other company compensations. But apart from health insurance, other companies also provide retirement plans for their trusted and qualified employees. In this article, you’ll understand further why it’s beneficial to have the pension scheme as part of your company’s benefit to employees.

In the United Kingdom, the government recently introduced the auto-enrolment scheme. Launched in early October 2012, auto-enrolment plan seek to improve the standard of living of millions of people when they retire. Employers in the UK have a major role to play to implement this new pension scheme. Once you start learning about auto-enrolment, you’re likely to have more questions in mind. If you need assistance on how to apply auto-enrolment, you can search for Aviva Auto Enrolment. Aviva is one of the leading insurance provider worldwide. They can provide you all the answers to your insurance problem.

According to InvestorGuide.com, there are two types of employer-sponsored retirement plans: qualified and non-qualified. If the employee meets the requirements set in the Internal Revenue Service (IRS) Code and the Employee Retirement Income Security Act (ERISA) of 1947 then they can obtain the qualified retirement plans. Non-qualified plans apply to those employees that either do not meet the IRS Code or the ERISA requirements. These are funded by employers and it’s their responsibility to explain to their employees that they cannot get the tax benefits provided to qualified plan holders. The benefits under this scheme are paid at the retirement age in the form of annuities, which are taxed as ordinary income tax or in lump sum payments.
Here are the tax benefits under the qualified pension scheme:

– Allow employers to deduct annual allowable contributions for each participant
– Earnings on the contributions are tax-deferred until withdrawn by the employer for each participant
– Some taxes can be deferred even further through a transfer into a different type of Individual Retirement Account (IRA)

Retirement scheme is part of the planning one does to be prepared for life after paid work ends, not just financially but in all aspects of life. By providing this benefit, you can be sure that you’ll attract reliable workers who’ll stay in your company for a long time.