When the employee reaches 62, the individual can start to draw on their social security and receive a prorated amount. Employers typically contribute a portion of their profits to the pension fund, regardless of the level of contribution by the employee. This is also a type of profit sharing plan. Employees can have a portion of their compensation, which would otherwise be paid in cash, put into a company profit sharing or stock bonus plan by the employer. This results in a pretax reduction in salary, so the employee is not taxed on the amount set aside until after he or she retires.
Some companies match a percentage of what the employee contributes to the plan.
This plan is also less popular than other types of qualified plans. Employee Services Benefits Benefits some employers provide to employees in addition to the typical benefits. This covers workers injured on the job. The injury has to keep the employee out of work for an extended period of time. Both the employee and employer contribute to the fund.