Question

EFG Corporation EFG Corporation is considering the installation of some form of retirement plan. The owner's stated objectives for the plan, in the order of importance, are:

1. Rewarding long-term employees

2. Retaining employees

3. Providing a level of retirement income equal to 60% of the employee's earnings

4. Funding that is tax-deductible

5. No risk to employees of losing the available benefits

The company has been in business for 20 years, and has stable cash flow.

The company furnishes you with an employee census and is willing to contribute the equivalent of 35% of payroll to the plan.

Based upon their stated objectives, what type of retirement plan would be most suitable for the corporation? Explain your reasoning for the plan you choose.

Answer 1

Based on the requirements of the company they can choose a retirement plan which involves good repayment and also at the same time helps in retaining employees. They can have a plan where a certain percentage will be deducted from the salary of the employee each month and the equal amount will be added to the organisation also and this whole amount will be sent to the retirement funds of the employees. The employees need to work for a minimum number of years to avail complete benefits and after the completion of this period they can take loan on this amount if they have any need of money. This helps in providing the employees with good amount after their retirement and also helps in making the employees work for a long time which is beneficial to both the company and the employees. Hence this plan will be a good option for the company.