Noncontributory plan definition
/A noncontributory plan is any pension plan or other type of benefit plan that is paid for entirely by the employer . Participants in the plan are not required to make any payments. Employers frequently set up life insurance noncontributory plans for their employees , though the total amount of coverage tends to be low.
Advantages of Noncontributory Plans
There are several advantages to having noncontributory plans, which are as follows:
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Benefits low-income employees . The main advantage of a noncontributory plan is that employees incur no expense in exchange for the benefits provided. This can be a major benefit for low-income employees, who might not otherwise be able to afford the associated benefits.
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Attracts new hires . If properly marketed to job candidates, the presence of noncontributory plans can convince them to accept job offers from the employer. This can result in higher-quality candidates being hired.
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R etains existing employees . If a noncontributory plan offers major benefits that are critical to employees, then its presence may convince some employees to continue in the employment of the company, rather than looking elsewhere for a job.
