C2 - Providers of benefits Flashcards
Five key stakeholders of retirement provisions
State Employers/groups of employers Individuals/groups of individuals Trustees Advisers
Types of benefit (other than retirement)
Death Protection Permanent disability Temporary/permanent absence Subsided healthcare Family support Savings Subsidised goods Subsidised services
How does the state provide a major role in the provision of benefits?
- Direct provision of benefits to individuals
- Encouragement/compel private provision
- Educate/require education
- Regulation of provision by other providers
Three main drivers of employers deciding to sponsor benefits
- Compulsion/encouragement from State
- Paternalism
- Attract and retain good staff
How do flexible benefit schemes help meet the different needs of employees?
- Allow members choice
- Allow different groups to select appropriate benefits
- Benefits can change as personal circumstances change
- New benefits can be offered at little/no cost to employers
Benefits to individuals of pooling their resources
- Helps protect against uncertainty of cost
- May be more cost effective than providing benefits individually
Organisations that may pool individual resources
- Trade unions
- Employee associations
- Religious organisations
- Continuing Care Retirement Communities
Objectives of the State
PATERNALISM Political popularity Avoid burden on State Target needy/safety net Encourage/educate Regulate appropriately Needs of individuals met Admin simplicity Limit dependency Inclusion (social) Stable, affordable cost Macroeconomic effect
Objectives of the employer
COMPANIES VATT Cost - stable, affordable, flexible pace Opportunity cost Manpower planning Paternalism Attract/retain staff Needs of employees met Integration with State benefits Employee appreciation Simple scheme
Value for money
Admin costs low
Tax breaks used
Target certain employees
Objectives of members
- Maintain standard of living
- Predictable, Stacie Benefits
- Security
- Provision if ill/made redundant
- Protection for dependants on death
- Flexibility
- Value for money
- Maximise use of tax advantages
- Easy to understand
- Affordable
Objectives of trustees
- Security
- Operate within trust law
- Act in interests of all members
- Invest assets appropriately
- Maintain support of sponsor
- Simple/accurate administration
- Regular monitoring of Scheme and sponsor covenant
- Use specialist advice if needed
- Not profit from duties
- Maintain confidentially
Difficulty of multi-employer schemes
Allocating liabilities between employers, particularly in the case of insolvency of one of the sponsors
Fund segregation may help reduce problems
Key roles of financial advisers
- Help an individual to set financial goals for their savings
- Advise in appropriate levels of life assurance or medical protection
- Arrange suitable savings or insurance policies
- Assist with tax planning
