The trend of growth for emerging SMEs in Ireland is impressive. Everywhere you turn SMEs are thriving. As an enterprise, whether big or small, your employees are a critical part of your firm. And that is where a pension plan comes in. There are tangible benefits to having a pension plan for your employees. Here are a few:
- Motivates employees
One of the advantages of having a pension plan from the employers’ point of view is to motivate the best employees to work for them longer in anticipation of a better retirement package. Employers can use pension plans to motivate their workforce by assuring them of a better retirement.
Pension plans demonstrate the value a company places on the service of its employees and a willingness to ensure adequate retirement income for its entire population. The labour market will view the way a company treats its old workers and draw conclusions as to the way other employees who will work for the same organization will be treated on leaving the company.
Employees who have a good retirement package will proudly speak of their former employers and hence creating a good public image for the organization.
- Attracts the best talent from the labour market
When the labour market is reaching full employment, skillful employees sometimes have more than one job offers and what usually tips the scale are good benefits. A potential employee will pick an employer with good health benefits, a good working culture and great retirement benefits.
A pension plan gives a potential employee confidence in a particular employer. As times change and economies turn round and become robust, employers with best-managed pension plans will retain the best talents while those that have never taken this benefit for their employees seriously will be at the losing end.
These two are the major benefits for having a pension plan for employers. They may look few but their importance cannot be underscored.
Benefits employees enjoy when they contribute to a pension plan.
Comfort in retirement – The major goal of a pension plan is to live in comfort during your retirement. A good pension plan ensures that you maintain your standard of living even after you leave active employment
Encourages a saving culture – a pension plan is for all intents and purposes a saving plan. Very few employees will save personally for their retirement and therefore a pension plan provides an avenue for forced saving.
More than just saving – A pension plan goes beyond just saving. The money you contribute towards a pension plan is invested by fund managers and earns interest. This means that are retirement you will not only have a sum total of all money you saved your money will have earned interest and grown over the years.
Tax relief – Employees get tax relief on their contributions to the pension plan. Furthermore, when the contributions to a pension plan are invested, they earn a tax-free income.
In the event of death – most pension plans come with a death-in-service benefit which makes employees feel assured of their defendants’ provision in the event of death in service. The contributor gives instructions on how they would like the pension money to be allotted to dependents in the event of death.