Subject: Management issues affected by the instability of Social Security I read
ID: 2654728 • Letter: S
Question
Subject: Management issues affected by the instability of Social Security
I read the question then I come up with my opinion please read my opinion them tell me what is your opinion, (what are you agree with or disagree with)
Here is the question:
As a benefits manager, how might the potential demise of Social Security affect the decisions you make regarding other benefits that you have the option of providing to your employees? How might it affect your company's human resource planning process?
Here is my opinion
As a benefits manager acknowledging that the demise of social security is pending, I would be tasked with finding more robust retirement planning options without significantly increasing the cost to the company. Increasing company 401k matching is a solution, but one that might not be necessarily a financial option. I think that mandatory employee training on the status of social security and the importance of retirement planning is crucial to addressing this problem. Most employees are not exposed or do not take this time to understand possibly confusing topics such as SS and retirement. People think that retirement planning is something they can put off for the future. I think that a financial advisor who specializes in retirement planning should be provided at the firm’s expense to employees. Also, possibly changing the bonus structure at the firm where part of an employee’s bonus is deposited into an additional retirement investment vehicle separate from a 401K. This would promote retirement saving activities without additional costs to the firm.
Please leave me your comments what is your opinion (what are you agree with or disagree with my opinion)
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Explanation / Answer
If Social Security is no longer provided, a benefits manager should consider increasing and incentivizing retirement benefits. With the payroll tax funding social security, taxpayers will be best served if they funnel their payroll tax deductions into 401ks or other tax deferred vehicles. Their employer should also incentivize employees to save more by increasing the company match. This way, employee and employer can realize tax benefits for retirement contributions. This approach would benefit the employee beyond their employment years as well. Another solution will be to take the money that would otherwise be used on social security, to beef up health insurance for active employees. When people get older, they will need more medical care and a more robust plan can help employees reduce health care costs. The company may offer deductible health insurance plans with an Health Savings Account feature. The employer can then add money to the HSA for the employee. The HSA serves as a way for employees to save for medical costs but it can be used for retirement as well. The allows the employee to take the benefit when he/she leaves the employer
Realizing that Social Security may end, human resource personnel need to begin planning and budgeting for the inevitable. Human resources need to begin educating their workforce on ways to prepare for retirement. Specifically, action needs to be taken as soon as possible to give people the opportunity to prepare by adding more to their retirement savings. If people are made aware of the seriousness of the issue, maybe they will budget for an extra 1-2 percent deferral in their 401k. Social security factors in the retirement needs of citizens so people need to make an adjustment to retirement savings due to no more SS. Human resources should plan meetings and presentations for their employees concerning the change.
Human resources may have to cut back on other benefits to help beef up on retirement and health insurance needs if social security is eliminated. There is only so much money a company has to spend. A company may not be able to offer high end plans as they won’t have the money to pay for them if they are over allocating their money elsewhere. This could lead to not retaining and capturing top talent. Human resources needs to look at what is strategically most important for the firm and its employees. Human resources will also need to look at salaries if the 401k company match is going to increase. Larger companies will have to use their size and strength to bargain with insurance companies to get maximum value out the benefits they offer. Companies can use its share of the 6.2 percent payroll tax per employee to provide loyalty incentives to the employee, which could increase productivity. For example, the employer could offer additional payments to employees who stay with the company longer or for employees who demonstrate excellent service.