Employee Retirement Benefits – Pros & Cons

Oscar R. Mondragon

Posted on 02/17/2021

by Oscar R. Mondragon

Employee Retirement Benefits – Pros & Cons

Whenever an employee discusses their new company with friends, one of the most common questions (right after how much they’re getting paid) is what sort of benefits the company offers. Leaves and medical coverage are great, but what sets employers apart are the retirement plans they offer.

Not only does this show how much you, the employer, care about employees but it also makes your workplace a destination for many!

However, retirement plans can get rather tricky to offer. There are several pros and cons of offering retirement plans to your employees, each offering a new perspective on the possibility. Here, we’ll look at them briefly to give you a better understanding of what you can expect.

Pros of Retirement Plans

Tax Advantages

One of the biggest advantages you get from retirement plans is the tax advantage your business gets. Governments want you to offer these benefits and therefore encourage via tax benefits.

Enhanced Employee Motivation

These plans serve as great motivators for existing employees to continue working with you until retirement.

Recruiting Advantage

They also present themselves as incentives for people looking for jobs, making your workplace more desirable.

Personal Benefit

It’s not just employees that get to save via these plans, but you, the business owner can utilize them as well. You can enroll in these programs to effectively aid your retirement planning ventures.

Cons of Retirement Benefits

There are two main cons of retirement plans to consider:


These plans are rather complex to implement and time consuming. If not done right, implementation can be very costly. You will need help from professionals, which is a cost on its own.

Non-Qualified Plans Might Not Qualify for Tax Deduction

If you fail to qualify your plans properly, chances are that your business may not be eligible for a deferred tax deduction until your employees get the money. This could take years.

Explaining the Cons

These cons might seem pretty substantial – especially on your financial accounts – but that is not the case with due diligence. The best way to avoid having to deal with these cons is to first decide on which plan suits you best. We wrote an article about the different types of employee retirement benefits you can offer, which we recommend you go through when deciding.

When you think you have the best option selected, move on to finding a good partner to help you through the process. Centric has been helping many companies set up their employee retirement benefit plans at the lowest costs possible, so you can always get in touch with us!

Decide how much time and resources you want to commit and then let the professionals handle the rest! That way, you don’t just get the best solution for yourself, but also for your employees.

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