Postretirement benefits (OPRBs) are benefits that an employer may
provide after an employee retires other than a pension plan. Some of
these benefits could be health insurance, life insurance, and disability
insurance. For this discussion I will base my similarities and
differences to health insurance, I chose this topic because it is a very
important benefit to carry anytime and especially when you get older.
Health insurance can be very costly, and even more so after someone
hits retirement age and being able to continue that benefit after
retirement could really help cover or lower some of the out-of-pocket
costs.
Some similarities between pension and health insurance are both are
postretirement benefits, both benefits will be beneficial to employers
for bringing in and keeping valuable employees, and both are a big
portion of two standards that are alike in procedures and concept.
Some differences in pension and health insurance are, pension plans
are typically funded, as health insurance is not, pensions are
straightforward and precise in amounts while health insurance are
uncapped and adjustable. Pensions are paid out monthly, health
insurance are paid when used or as needed, pension plan variables
are rather predictable, and health insurance plans are variable and
unpredictable.
While looking at the similarities and differences between pension and
health insurance, I believe the pension plan would be the one that
most companies would choose. For one, with a pension plan, the
retirement benefits are fixed amounts by the contract terms, the only
thing that isn’t identified are the terms. Pension plans also offer
employees a level of retirement security. Lastly, pension plans may
boost optimism in employees, lower the turnover of employees, and
give a certain employer an edge in the job market.
Reference:
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate
accounting: Reporting and analysis. Boston, MA: Cengage Learning.
