Employee benefits

 Introduction📢

A benefit is any extra benefit an employee obtains from their employer once it comes to their work. Everyone receives a salary, but benefits also include things like paid time off, pensions, and health insurance. Benefits can be categorised in a variety of ways. Retirement plans and paid holidays are examples of fringe benefits. Employers can deduct them from taxes, but employees are not taxed on them. The Administration for Social Security further provides retirement benefits. This is given to those who have attained retirement age and gathered sufficient credits to qualify for the programme. Benefits are typically provided as a tool for employers to attract candidates to available positions and to keep talented employees.

Types of employee benefits📢

 📌 Pension schemes

 📌 Personal Security

 📌Financial assistance

📌 Personal needs

📌 Company cars, petrol, food, uniforms, utilities, and accommodation

 📌 Quality of workplace and improving the quality of life

Pensions📢

Pension will provide an income for employees after they left the job or retire. These funds would be paid by the employer or funded by the previous contributions of the employee.

These funds are provided to demonstrate that the organization cares about the employee's long-term well-being. This will retain high-quality working people and feel secure about the organization.

The limit and level of funding from pension schemes depend on the type of scheme and level of contributions. The main schemes are as follows,

Defines benefit schemes (Final salary)📢

📌Privileged to have a pension on retirement

                At retirement, the employee is entitled to get a pension calculated as a fraction of his last salary. This fraction would be differed according to the accumulation of service years.

📌Employee and employer contribution

                A fixed percentage of salary could be contributed by the employer. There is not any direct bond between fund size and the pension paid. The balance of money in the fund is invested to provide a fixed income.

📌Dependants

                The closest dependants of the employee are eligible for a fraction of the employee’s pension even if the employee dies within the active service or at retirement.

Defines contribution schemes (Money purchase)📢

📌Pension eligibility

                The employee gets a pension on retirement according to the size of the deposit accumulated both by the employee and employer. The pension amount will be decided by the amounts of contribution, considering the total fund accumulated, and the rate of annuity received by the employer by investment. Not related to the employee’s final salary.

📌Employer contribution

                Both employee and employer contribute a fixed amount from the salary.

📌Pension fund

                Total contributions are deposited and invested usually in an insurance company. So at retirement, the employee could use their return as a pension.

📌Dependants

                The closest dependants receive a pension at the death of an employee within active service or at retirement.

Defines benefit  (Final salary)	Defines contribution  (Money purchase)
✔Pension is guaranteed	✔Pension is uncertain
✔Benefits are pre-defined	✔Benefits would depend on the accumulated deposit
✔Employer contribution may vary	✔Fixed employer contribution
✔Risk of finance for the employer	✔Financial risk for the employer
✔Benefits depend on the total service years	✔Not depend on years of service
✔May be unfair for early service leavers	✔Decent for all

 

Stakeholder pension📢

This pension scheme is designed to provide a suitable pension for lover-paid employees. Employees could contribute funds according to their will at any instant in which they are comfortable.

Total reward statements📢

Employers provide a statement stating how much they contribute to their employees to make the knowledgeable. So that at retirement and other events employee would appreciate their employer.

 

Allowances📢

These are paid apart from the basic salary for special instances. Following are the main categories of allowances.

📌Location allowances- for employees who are living in cities with a higher cost of living.

📌Overtime payments- paid for employees if they work for extended working hours.

📌Shift payments- usually employees who work night shifts are eligible for this payment.

📌Working condition allowance- employees who work under unpleasant conditions are paid with a working condition allowance.

📌Subsistence allowances- when working away from home organization pay for accommodation and food.

📌Stand-by and call-out allowances- when someone is needed to work whenever needed are eligible for such allowances.

References📢

Mightyrecruiter.com

https://www.mightyrecruiter.com/recruiter-guide/hiring-glossary-a-to-z/benefits/

 

Brighthr.com

https://www.brighthr.com/articles/pay-and-benefits/pensions/

 

citizensadvice.org

https://www.citizensadvice.org.uk/debt-and-money/pensions/types-of-pension/workplace-pensions/

 

   

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