CHP 5: Benefit Providers

Question 1

List the 6 key roles of the State in relation to benefit provision

Answer 1

1. Provide benefits to some, or all of the population
2. Sponsor the provision of such benefits, perhaps by providing appropriate financial instruments.
3. Provide financial incentives, usually through the tax system, either for other providers to establish appropriate provision, or to subsidize the cost of providing such provision to consumers.
4. Educate or require education about the importance of providing for the future.
5. Regulate to encourage or compel benefit provision by or on behalf of some of the population.
6. Regulate bodies providing benefits, and bodies with custody of funds, in an attempt to ensure security of promises made, or expectations created

Question 2

What is a multi - employer scheme and what is its key advantage and disadvantage?

Answer 2

A multi-employer scheme is a benefits scheme set up jointly with other employers, often from the same industry.

Advantage: It makes provision more cost effective.

Disadvantage: More care must be taken over allocating the liability for funding DBs, particularly in the event of the insolvency of one of the sponsors.

Question 3

List 5 reasons why employers finance benefits for employees.

Answer 3

1. Compulsion or encouragement from the State
2. A desire to attract and retain good quality staff
3. A desire to look after employees and their dependents financially beyond the level provided by the State.
4. To pool expenses and expertise