Retirement benefits in the public sector
Abstract
Organizations across all regions provide their employees with different benefits (Choate, 2011). The benefits range from bonuses, allowances, to health and retirement benefits. Specifically, organizations in the public sector have different retirement plans or schemes for their employees in order to ensure that their financial and even health future is guaranteed (Choate, 2011). This paper focuses on comparing and describing retirement benefits for four different organizations located in Southern California. The four public agencies to be analyzed are Southern California Edison (SCE), Edison International (EIX), Occidental Petroleum Corporation and Walt Disney Company. The paper explores the retirement benefits using the companies’ official websites and other academic sources.
Retirement benefits in the public sector
Most organizations, both in the public and private sector provide retirements for its employees. The retirement age and other relevant information concerning retirement depend on the state and individual organizations (Kotowska, Stachura & Strzelecki, 2008). Organizations should adhere to these laws failure to which might result in legal cases and legal costs. Any changes to these laws should be taken into consideration by organizations. There are different ways of calculating the retirement benefits (Choate, 2011). These might differ from one organization to another depending on the kind of business operations. The main purpose of this paper is to compare the retirement benefits of four different Public agencies Southern California. Local and state government workers collect taxpayer assured retirement benefits which are more generous when compared to those that are available for employees in the private sector (Jacobson & Buchmueller, 2007). The traditional defined public retirement benefits, is flawed and has rigorous financial effects, which will have an effect in the future generations of American citizens. Specifically, the paper looks at how these benefits are calculated, recent adjustments to benefits, and other important aspects. The paper also provides details on retiree health benefits.
Both Southern California Edison (SCE) and Edison International maintain two main types of pension plans that cover the named officers. For SCE, the Retirement Plan is the organization’s qualified and defined benefit staff retirement plan. The named officers take part in the plan on similar terms as the organization’s other eligible workers (Schneider & Pinheiro, 2008). However, because of maximum restrictions imposed by the Internal Revenue Code and Employee Retirement Income Security Act (ERISA) on the yearly value of a pension that may be paid under a financed specific benefit plan, the retirement benefits (pension and health) that would be given to the named officers under the formula of the benefit plan are restricted (Edison International, 2014). This makes the companies’ retirement plans and benefits unique. There is also the Executive Retirement Plan, which is an unfinanced equalization plan of the kind allowed by ERISA (Plunkett, 2012). It is designed to permit the named officers and other workers to get the full value of benefits that would be given under the companies’ retirement plans and other particular benefits such as health. The two companies also offer health benefits and packages for their retirees.
For Occidental Petroleum Corporation, there is the service/age weighted plan. For this plan, allocations are based on service, age, or both. There is also the Similar Plan or New Comparability Plan in which allocations are given on the basis of classification of participants. In this case, classification comprises predominantly or wholly of highly compensated workers. This implies that the plan offers an extra rate of allocation on the mentioned threshold, which is that rate allowed under the disparity rules of section 401(1). Money purchase involves a pension plan besides a target benefit plan, which necessitates a fixed proportion of compensation to be given to each eligible worker (Kieso, Weygandt, & Warfield, 2012). The total participant directed account pension plan is a plan whereby participants are given the chance to direct the investment of all the allocated assets to their personal accounts irrespective of whether 29 CFR 2550.404c- 1 is planned to be met. The participant-directed Account plan is whereby default investment account is used for participants who do not direct their assets into their accounts (Kieso, Weygandt, & Warfield, 2012). On the other hand, the controlled group is a plan under the company’s retirement benefit found in Code sections 414(b), (c), or (m). The company provides personal savings plan and retirement plans to ensure that the future of their workers is guaranteed (Occidental Petroleum Corporation, 2014). These are unique to the company.
Being the biggest public company in Southern California, Walt Disney Company ensures that the needs of its employees are met (Dowd & Hutchinson, 2010). The company offers adequate support and financial benefits to its employees, which boosts their morale. This, in turn, results in increased productivity, and eventually the profitability of the company. The organization offers investment and savings options that help workers and cast a plan for their future in terms of finances. Above 64,000 workers and cast members are entitled to retirement benefits after vesting for the benefit as provided by the company. More than 33 percent of hourly workers and 76 percent of salaried workers presently take part in the company’s 401(k) plans. In addition, all domestic workers are entitled to buy stock through the company’s program of Employee Stock Purchase. On estimate, 11,500 cast members and workers presently take part. Just like health benefits for workers, the company also provides its retirees with health benefits (Kenny et al., 2011). The company is committed to the complete welfare of employees: emotional, physical, and financial. Eligible members are able to get these benefits even during the years after retirement. These health benefits help retirees to deal with their aging needs that might present significant financial challenges if the benefits were not offered. The retirement and financial benefits of Walt Disney are under the save for tomorrow program, which is unique to the agency when compared to the other three agencies. The company has the normal 401(k) savings plan, a retirement savings plan for employees who are paid salaries, and the staff stock purchase program where retirees of the company can buy the company’s stock (Walt Disney Company, 2014).
Each company has its own way of providing the retirement benefits to its employees. What matters are the laws that organizations should abide to and that this is done in line with company’s goals and vision.
References
Choate, N. B. (2011). Life and death planning for retirement benefits: The essential handbook for estate planners. Boston, MA: Ataxplan Publications.
Dowd, K., & Hutchinson, M. O. (2010). Alchemists of loss: How modern finance and government intervention crashed the financial system. Chichester: Wiley.
Edison International. (2014, January 1). Edison International: Home. Edison International: Home. Retrieved March 13, 2014, from https://www.edison.com/
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2012). Intermediate accounting. Hoboken, NJ: Wiley.
Kotowska, I. E., Stachura, J., & Strzelecki, P. (2008). Equality of retirement benefits received by men and women in selected European countries: Childbearing and future benefits. Brussels: ENEPRI.
Plunkett, J. W. (2008). The Almanac of American Employers 2009: The only guide to America’s hottest, fastest growing major corporations. Houston, Tex: Plunkett Research Ltd.
Schneider, P. J., & Pinheiro, B. M. (2012). ERISA: A comprehensive guide. New York: Wolters Kluwer & Business.
Walt Disney Company. (2014, March 14). The Walt Disney Company. The Walt Disney Company. Retrieved March 12, 2014, from http://thewaltdisneycompany.com/
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