At some point, we all will have to give up working. Age and exhaustion will prevent us from being able to enter any form of labour. Businesses also recognise this, offering employees packages to aid them in retirement. This makes for an excellent incentive for loyalty, since the longer an employee works for a business the more they’ll get out at the end. Some of the best companies to handle retirement are in America and it’s worth considering what they offer their employees.
What is a 401(k)?
In the USA, people often talk about a 401(k) as shorthand for retirement. The name comes from American tax code that governs retirement plans. This must be distinguished from a pension fund. As the Wall Street Journal highlights:
“Pension funds were managed by the employer and they paid out a steady income over the course of the retirement.” A 401(k), however, focuses more on investment. Employees are able to control how their money is invested. “Most plans offer a spread of mutual funds composed of stocks, bonds, and money market investments.”
Unlike pension funds, employees cannot access money immediately. It’s also tied to the concept of “vesting”, or ownership of funds. As CNN points out, the longer an employee is with a company, the more they’re able to retain at the end.
Two major companies plans
Knowing this, we can better appreciate what companies have done for their employees in America. As Reuters noted in 2013, Bank of America moved its $19 billion 401(k) in house, serving 300,000 participants. “Bank of America’s 401(k) plan is the eighth largest in the United States in terms of assets, based on the bank’s most recent numbers.” Employees know that working for such a prestigious company provides many options – meaning they’re less likely to leave or find other work. Loyalty pays off, in this case quite literally.
Another notable company is Publix, a supermarket chain. They offer a slightly different plan. ThinkAdvisor points out:
“In a 2013 Forbes report, Publix said that a store manager with 20 years of seniority, earning between $100,000–$130,000, probably has $300,000 in stock and has received another $30,000 in dividends.
“There is no dividend reinvestment plan, although there is a 401(k) plan—to which Publix contributes 50 cents on 3 percent of pay.”
These companies are large enough that they can afford such plans. They’re also working within a long established tax system, in one of the richest countries in the world. Naturally, not all businesses are in such positions. However, it’s worth seeing that even big companies put a lot of emphasis on looking after employees – even after their labour for the business has stopped.
(Credit: 401(k) 2012 / Flickr)