Comparision of Retirement Plans for employees working in the private Essay

Comparision of Retirement Plans for employees working in the private sector vs employees working in the public sector - Essay Example The similarities and differences in the retirement benefit plans, including taxation of pension as well as the profit sharing plans, between the private and the public sector are critically analyzed and explored in detail. According to Gucciardi (2009), the pension plans of the public sector workers are stable and offer the workers certainty during their retirement period. The public sector recently made changes in its plan to improve the benefits the personnel receive. The public sector employers are responsible for almost all the contributions made to the pension system on behalf of their employees. Generally, the public sector workers are responsible for less than one percent of the contribution costs with their employers responsible for in excess of 99 % (Gucciardi, 2009). The private sector pension plan is different from the public one in that it is mainly based on defined contributions, unlike the defined benefit employed by public sector. Majority of private sector employers provide their personnel with the defined contribution plans. On the other hand, the majority of the public sector employers provide their workers with defined benefit plans (Gucciardi, 2009). The public sector provides its employees with both the defined contribution as well as the defined benefit plan. Conversely, the current trend indicates that the private sector is shifting away from the defined benefit to defined contribution plan. Further, the public sector employees receive subsidized health insurance benefits upon retirement, whereas the private sector employers do not offer such benefits to their retirees (Falk, Acs, Carrington, Dahl, & Jimmy, 2012). The number of private sector employers providing medical benefits to the retiree has declined considerably in the past decade. Over this period, the public sector employers have increased their medical benefits to the retirees despite the challenge of getting adequate funds to meet the