Managing Employee Benefits: Social Security and Retirement Planning at Taylor Foods
As Gavin Jackson leaves the monthly professional luncheon for human resource executives in his area, he starts to consider how the information he learned will affect his company, Taylor Foods. The program speaker provided an update on the Social Security system and how challenges in financing the system may affect organizations. As the director of human resources at this large food-processing and distribution company, Gavin must plan the retirement benefits for the organization’s employees. Gavin had been aware that the Social Security system is in trouble, but now has some clear ideas about how it will affect both the retirement benefits offered by Taylor Foods and the retirement plans of its employees.
Gavin learned that the current Social Security system is unstable and that the future of benefits to be provided is uncertain. In particular, the Old-Age, Survivor, and Disability Insurance (OASDI), which provides retirement benefit payments to retired workers, is under a strain. Retirement benefits comprise a majority of the payments made by the Social Security system, and the instability of the system suggests that current workers may not be able to rely on the Social Security system as it exists today to support them in retirement. Gavin knows that this information affects the retirement benefit planning at Taylor Foods.
The speaker also noted that employees retiring in the relatively near future may base their retirement decisions to some extent on the Social Security benefits available to them. While employees may receive their retirement benefits from Social Security starting at age 62, the amount is reduced if they haven’t reached the full retirement age, which is determined based on year of birth. For example, the age for full retirement is 67 for anyone born in 1960 or later. Further, the system contains other incentives to encourage individuals to delay retirement. This is important to Taylor Foods, as the age at which employees plan to retire affects the company’s human resource planning process. Annually, Gavin creates staffing plans that include estimates for turnover of employees, and employee retirements are included in those estimates. This information, coupled with a current downturn in the economy, leads Gavin to believe that Taylor Foods may experience a lower level of turnover as employees delay retirement.
Gavin is considering both of these issues as he considers retirement benefits, as well as staffing planning at Taylor Foods. While the company currently offers a competitive retirement plan, he knows that he needs to reexamine the benefits in the context of his new understanding of the Social Security system. He also needs to consider how employees planning to delay retirement will affect the organization and the human resource planning process.
- How does the instability of the Social Security system affect retirement benefit planning at Taylor Foods?
Should Gavin consider the possibility of employees delaying retirement in the company’s human resource planning process?