Lecture Employee benefits and retirement planning - Chapter 28: The process of employee benefit planning. This chapter deals with the concept and process of employee benefit planning. The chapter introduces this section by looking at what benefit plans can do. | What Benefit Plans Can Do 1. Help employees meet needs that otherwise could not be met a) health care b) retirement savings c) provide income if employee dies Copyright 2009, The National Underwriter Company What Benefit Plans Can Do 2. Provide unique tax benefits a) employer enjoys immediate tax deduction for funding retirement plan; employees can defer tax b) employer cost for health care plans are fully deductible and benefits are completely tax-free to employee c) substantial tax benefits exist for other plans such as group-term life, disability, stock options, etc. Copyright 2009, The National Underwriter Company Steps in the Planning Process 1. Meet client and gather data 2. Identify employer’s objectives, quantify and prioritize them 3. Analyze existing plans to identify weaknesses and needs for revision 4. Formulate a new overall employee compensation plan Copyright 2009, The National Underwriter Company Steps in the Planning Process 5. Communicate the new plan effectively 6. Develop a program for periodic review of plan’s effectiveness Copyright 2009, The National Underwriter Company Steps in the Planning Process STEP 1: Meet the client and gather data Need to know: employee census employer’s financial information complete information on existing plans financial and estate planning needs of executives Copyright 2009, The National Underwriter Company Steps in the Planning Process STEP 2: Identify the employer’s objectives; quantify and prioritize them Common plan objectives include: heath care, retirement income, disability and life insurance for employees; these can be coordinated with Social Security and employee’s own plans recruit, reward, retain, retire employees Copyright 2009, The National Underwriter Company Steps in the Planning Process Common plan objectives (cont’d): resist unionization or provide nonunion employees with comparable benefits provide benefits similar to those offered by others in same industry or region . | What Benefit Plans Can Do 1. Help employees meet needs that otherwise could not be met a) health care b) retirement savings c) provide income if employee dies Copyright 2009, The National Underwriter Company What Benefit Plans Can Do 2. Provide unique tax benefits a) employer enjoys immediate tax deduction for funding retirement plan; employees can defer tax b) employer cost for health care plans are fully deductible and benefits are completely tax-free to employee c) substantial tax benefits exist for other plans such as group-term life, disability, stock options, etc. Copyright 2009, The National Underwriter Company Steps in the Planning Process 1. Meet client and gather data 2. Identify employer’s objectives, quantify and prioritize them 3. Analyze existing plans to identify weaknesses and needs for revision 4. Formulate a new overall employee compensation plan Copyright 2009, The National Underwriter Company Steps in the Planning Process 5. Communicate the new plan .
