| Country |
Benefits Provided |
| Brazil | There are some private defined benefit plans, but defined contribution plans are growing in popularity. Severance plans resemble a defined contribution retirement plan with an 8 percent annual employer contribution. |
| Germany | Employers are permitted to establish tax-deductible book reserves without establishing a separate trust for pension schemes. Separate trusts and insured schemes are also common. |
| Japan | Lump-sum severance plans are universal, using tax-deductible book reserves as the funding mechanism. Separate pension trusts are allow able only for employers with more than 100 employees. Insured pension schemes are available for smaller employers. Pension trusts are subject to an annual tax of approximately 1.2 percent on the assets. No vesting is required. Employers with more than 5,000 employees may contract out of government-provided pensions. |
| Norway | Pension schemes are common only in medium-size and large companies nearly all plans consist of insurance contracts rather than separate trusts. |
| South Korea | Employer-provided defined benefit pension schemes do not exist. Lump-sum severance plans with low benefit levels are nearly universal Individual defined contribution plans with employer contributions are becoming popular. |
| Thailand | Employer-sponsored pension plans are not mandatory but, where provided, the employees must contribute at least 3 percent of salary. Employers contribute at least as much as the employees and may contribute up to a tax-deductible limit of 15 percent. Invested assets are not in an irrevocable trust, thereby allowing the employer to capture some of the investment income as income to the company. This is equivalent to the book reserve method in other countries. |
| United Kingdom | A wide range of defined contribution and defined benefit plans is available. If the benefits provided are substantial, the employer can contract out of the government-provided pension benefits. Lump-sum payments at retirement are common, resulting in many arrangements that mimic the severance plans found in other countries. The United Kingdom is one of only a few countries that do not require mini mu recognition of accrued liabilities through separate funding or book reserves. |
| United States | With less than one-half of the work force covered, employer-provided retirement plans are not as common as in most other countries where there is nearly universal coverage of employees. A wide variety of de fine benefit and defined contribution plans using tax-exempt trusts or insurance contracts is used. Non-tax-deductible book reserves, with no separate funding, are common for benefits provided to executives. Mandatory employee contributions are allowable but are not common. When employee contributions are mandatory or otherwise allowed, their tax status is dependent on the particular type of plan established by the employer. |
| Zimbabwe | Employees contribute 5.0 to 7.5 percent of salary into employer- sponsored defined benefit plans. Employers typically contribute an additional 10 to 12 percent of employee salaries. Funds must be in a separate trust with one-half of the trustees representing employee interests. Some 55 percent of all trust fund assets must be invested in government securities.
Source: Bruce A. Palmer, “Employee Benefits,” in Harold D. Skipper |
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