Early retirement packages are offered to employees who are close to retirement age. This allows the retiring employees to collect their pension payment even if pension plan from the employer starts at different age.
Usually the employer has the discretion to offer early retirement. For example, an organization may start normal retirement package at 65 years but by offering early retirement to employees who are 55 years or above, the employer buys the remaining period of work and this allows the employees to get pension earlier than normal.
If you are looking for typical early retirement packages, you will be disappointed because there is no typical package. Each employer has the discretion to offer what it thinks is right. However, here are some things that make up the part of an early retirement package:
- Cash payment
- Paid health insurance for certain period of time
- An increased severance pay as an incentive. For example, if the normal severance pay is two weeks of salary, for early retirement it may increase to four weeks or more depending on the employer's financial status.
- A buyout of all or part of the time remaining between the employee's year of service or age and the employer's retirement age. For example, if an organization has a policy that all employees retire after serving of 30 years irrespective of their age and you have worked for 27 years, the early retirement package will offer to buy up the remaining 3 years of your service so that you can get access to the pension the moment you accept the offer.
- Other sorts of compensation like stock options.
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