Blue Rose Benefit Plan Statement of Issue

Blue Rose Benefit Plan

Statement of Issue

Employee benefits do not cover the welfare of a single person. It extends towards the well-being of an entire nation. It helps the employers to retain potential employees and benefit the employees by protecting their whole family. Blue Rose Software offers a combination of Defined Benefit and Defined Contribution Pension Plans to its employees. Only senior executives who have more than 8 years of history with the company are given a chance to choose between DC and DB pension plans. All others are required to follow the DC pension plan. This causes several issues for beginner level employees. Not all employees are expert investors and they end up saving too little or making careless investments. Offering a chance for all permanent employees who have completed one year term with the company to choose their own pension plan based on their family and financial situation will be beneficial to all the staff working in the company.

Literature Review

The Defined Benefit plans (DB plans) were introduced traditionally to the war veteran’s way back in the 1950's. But, the pension scheme spread to all other sections of the federal government and the private industries very soon. It took away the burden of securing the retirement money from the employees. The employer was solely responsible for deducting a particular amount of money from the employees and investing it properly. These plans put enormous responsibility on the employers and give little benefit for the employees as the DB plans focus mainly on the final working years and earnings. Employers often had to hire private firms to manage the pension plans of their employees making them incur extra cost and responsibility. Such a process became tiresome to manage for huge corporate companies with thousands of employees. Employees who had fluctuating career and switched jobs frequently faced more loss than profit. Blake (2003) points out a highly skilled technical worker who...