I have an employee that has been with us for 35 years who has quit
working and is no longer in our employ.
we would like to give her some kind of retirement.
how do we set it up for her now that she is not working and how much
would be a aceptable amount each month do we give her?

Hello miketitell-ga,

First, I am assuming that you are doing this out of goodwill and that
this is not a requirement of you. Employees generally pay, at least in
part into a retirement plan throughout their work career, which is
usually a percentage of their pay. In your case, it appears that you
want to set this up for a loyal employee without having had a specific
system in place.

If the employee has in fact been paying into a pension plan, there are
specific requirements in place which you can find here:
http://www.dol.gov/dol/topic/retirement/index.htm

I would think that with 35 years, the pension should be at least 80%
of the average of the last 10 years, with yearly COLA (cost of living
allowances) adjustments at about or just below the inflation level.
This is just a suggestion, and opinions may vary from other users.
Ultimately, if there is no prior agreement, this amount would be
completely up to you.

You also need to clearly document the program you are setting up get a
signed agreement. There are pensions where the surviving spouse
continues to receive a benefit, and this may or may not be what you
have in mind. Here is a list of different plan options that are
possible: http://www.traf.mb.ca/index.cfm?pageID=234 with more
detailed information here:
http://www.traf.mb.ca/files/PlanTypesFacts.pdf

Many plans let the user choose a plan type, but the choice is
permanent and cannot be changed. You also need to realize that once
you start paying this and agree to do it, the expectation of you
continuing to pay will be there. You need to examine closely what
amount you are able to give per month for what could be a considerable
number of years. In essence, this is more of a monthly retirement gift
than a pension plan.

You should also carefully examine what types of government assistance
is available to the former employee. You do not want your money to
cancel out any sort of assistance that the former employee would
otherwise have been entitled to. IE: Old Age Security or similar
programs. Hopefully you can find a way to supplement this assistance.

One company that you may want to discuss this with is
http://www.ingretirementplans.com They offer a free consultation at
888-238-6243 and would be able to set up the monthly transfers for you
etc.

Are there any other specific questions you have regarding this? If so,
I will be happy to continue assisting you as best as I can.

All the best,

tisme-ga


Search Strategy:

retirement plans
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Thank You

Retirement plans are set up during an employee's tenure, not after
they quit. Over the 35 year period (for instance) a set amount is
withheld from pay and the employer can match or add to the retirement
plan. Then, when a person retires they have had the benefit of many
years of accumulating compound interest, and interest on interest.

As far as I see it, the only thing you can do now is continue to pay
her salary, or a portion of it, or perhaps you can pay her health
insurance for the rest of her life.

Why now? I find it hard to believe an employee would stay with you for
35 years and never ask about a retirement plan. You sound willing, why
did you wait?

Cynthia has good points, but I will add that I do think that it's kind
of you at this point to want to give her some sort of retirement, and
I think it's wonderful. A few people I know have been forced by health
problems to quit jobs after 40 or more years and received nothing
because they hadn't worked to age 65, when the company's retirement
plan kicked in. Their employers certainly didn't try to give them a
monthly stipend.