What are the other additional retirement benefits?
Other post-retirement benefits are benefits, other than pension distributions, paid to employees during their retirement years. Post-retirement benefits may include life insurance and medical plans, or premiums for those benefits, as well as deferred compensation arrangements. Although these benefits are primarily paid for by the employer, retired employees often share the cost of these benefits through co-payments, payment of deductibles and employee contributions to the plan, as required. Other post-employment benefits may also be called “other post-employment benefits (OPEB)”.
Key points to remember
- Other post-retirement benefits include benefits that employees receive when they retire and that are not pension distributions.
- Employees often share the cost of these benefits through co-payments.
- Other post retirement benefits may include dental care, legal services and tuition credits.
Understanding the other post retirement benefits
The benefits that fall into this category are all non-cash payment benefits available to employees, including dental, vision, legal and tuition credits. These additional benefits, as well as traditional retirement benefits, can represent a significant expense for the companies that offer these plans, particularly if the plans are fully funded by the company. The costs of these plans can be found in a company’s financial statements, usually in the notes, which will also indicate the size of the obligation as well as the level of funding of the fund.
Retirement benefits can be provided by local and federal government agencies, private and public companies, and not-for-profit institutions, such as charities, religious groups, colleges and universities. These benefits can be paid (in whole or in part) by the employer, the retiree or a combination of both.
Other post-retirement benefits and costs
Direct contributions that pay post-employment benefits may expose an employer to certain risks and responsibilities. For example, take the example of a former worker who has health insurance coverage at cost / premium rate as a current employee. Generally, a retired worker will be older than the average current employee and therefore more likely to incur higher medical costs. It is also possible that the health insurance coverage offered to them does not cover the costs of their care, possibly leaving gaps in coverage. As with other forms of retirement benefits, other post-employment benefits may be subject to strict reporting requirements due to their costs to the organization, as well as to the overall return on investment. relative to the value of the work done by employees before retirement.
Other additional retirement benefits and compliance
The rules governing how companies report retirement costs and obligations, as well as the disclosure of pension assets and obligations, are covered by section 715 of the codification of accounting standards (ASC 715), formerly called Declaration of Accounting Standards. n ° 87/88/158. . The American Society of Pension Professionals & Actuaries (ASPPA) provides a guide on how to manage the ASC 715 process, which describes the information to be provided for a client’s financial reports, as well as the methodology used to perform the actuarial calculations. required.