Changing Trends in Employee Retirement Benefits

Changing Trends in Employee Retirement Benefits 
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Changing Trends in Employee Retirement Benefits 
The two most common types of employee retirement plans in the United States today are the defined benefits and define-contribution plans. Observations from various researchers indicate that defined benefits were once the mainstay of firms' retirement plans (Alonso-García et al., 2018). However, their popularity continues to decline significantly while defined-contribution plans increase in popularity among employees. Understanding the decline in defined benefits plans and high preference for defined-contribution retirement plans begins by examining their characteristics.
In a defined benefits plan, employers pay an employee a specific amount of money or a lump sum after attaining the legible age for retirement. Usually, the plans apply formulas to compute the amount in the form of monetary of the employee's benefits by considering aspects such as the period within which an employee has worked for the company and their respective salaries (Alonso-García et al., 2018). On the other hand, the defined contribution allows one to save money in their preferred tax-deferred account instead of paying the employee a specific amount when they retire. Theref...