By Senior Advisor Andrew Schaetzke, CFP®.
For many people, retirement plans, pension plans, and Social Security serve as their primary means for income during retirement. As a small business owner, the specific plans that you offer within your business can dramatically improve the financial behaviors and long-term investment results of your colleagues.[1]
While defined-benefit pension plans were very popular through the 1970s, only 15% of private-sector workers are offered defined-benefit pension plans through their employers today.[2] Nevertheless, when implemented well, pension plans can still be a potentially cost-effective way to help employees have more income in retirement.
To help you differentiate among the most commonly adopted pension plans by small businesses, we provide the below resource. From this, you may come away with answers and action items for the following:
Who can participate in the pension plan?
Can employees contribute to the plan?
How and when are benefits paid?
What are the possible vesting schedules?
As always, we are here to help you evaluate the best pension plan for your business. Please feel free to reach out to us if you have any questions.
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Important Disclosure Information & Sources:
[1] “Nudge: The Final Edition“. Richard Thaler & Cass Sunstein, 2021, Penguin Books.
[2] “The Demise of the Defined-Benefit Plan“. James McWhinney, 18-Dec-2021, investopedia.com.
There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.
Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal professional or tax professional for specific advice. This material has been prepared for informational purposes only.
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