By 2020, five generations will work together at some companies for the first time. Human Resources (HR) departments that prepare to meet the different needs of each generation will secure the best talent. A recruitment approach that aligns corporate business strategies, internal equity, and employee compensation can be an effective strategy. Milliman’s Anthony Halim offers perspective in his article “Effective intergenerational employee compensation approaches.”
In this case study, Milliman’s John Wukitsch and Neil Hagin explain how a “peer group” analysis helped one large employer gauge the competitiveness of its retirement benefits program. The analysis provided a comparison of five competing programs, demonstrating to the employer that it needed to offer more generous retirement benefits to keep employees satisfied and retain key talent.
Indonesian Financial Accounting Standard (PSAK) 24 requires companies to report their employee benefit costs, including all associated taxes, on a gross basis. Calculating tax obligations in accordance with PSAK 24 can be complicated for companies that operate a net payroll system. In her article “Gross up for net benefits systems,” Milliman’s Gita Tanatika highlights methods employers can use to determine total gross benefits.
Congress has approved, and the president has signed, the Fixing America’s Surface Transportation Act (H.R. 22). The new law, which funds highway and mass transit projects, contains a provision that repeals the three-and-a-half month automatic extension of the Form 5500 filing due date. The extension was part of a law, the Surface Transportation and Veterans Health Care Choice Improvement Act (P.L.114-41), enacted in July that would have applied to filings made in 2017 for plan years beginning after 2015.
The repeal of the automatic extension means that the filing deadlines for Form 5500 (Annual Return/Report of Employee Benefit Plan) will not change from today’s deadlines: Employee benefit plan sponsors must file Form 5500 by the end of the seventh month following the end of the plan year, with a two-and-a-half month extension available. For calendar-year plans, the due date is July 31, with an extension to October 15 for those filing a Form 5558 in a timely manner.
The repeal also means that other filing deadlines, e.g., for Internal Revenue Service (IRS) Form 8955-SSA, and participant notification dates that are coordinated with the Form 5500 filing date, e.g., Summary Annual Report distributions, will not change.
For additional information about this revised and repealed Form 5500 filing deadline, please contact your Milliman consultant.
Postemployment benefits need to be considered when employee transfers take place within large organizations. Several types of transfer agreements exist. In the article “Accounting impact of the movement of employees,” Milliman’s Danny Quant and Kumala Sanjaya relate details regarding several employee transfer agreements they have advised on in Indonesia.
Here is an excerpt:
In one case, where the agreement between the original company and the receiving company was for the transfer of benefits in relation to the entire working period (including the working period before transfer from the original company), the cost was borne by the receiving company. There was no cash transaction or recording of debt between the two companies. This type of transfer policy will directly impact on the profit and loss (P&L) of each company. With the release of the employees for the transfer, the original company will recognise income that is due to a release of reserves from the benefits it no longer needs to provide, while the receiving company will recognise an expense related to the recognition of the working periods prior to transfers in the original company.
In another case, the agreement between the two companies was that the liabilities of the employees before the transfer were still the responsibility of the original company. How are the obligations allocated between the two companies in this case? When in relation to postemployment benefits in accordance with Indonesian Labour Law No. 13/2003 (the amount of severance, gratuity, and compensation paid in Indonesia), the benefits granted rely heavily on years of service and the final salary when the benefits are due. This raised the question about the amount of salary that should be used for the calculation of the portion of liabilities to be borne by the original company. If the agreed policy is based on the original company only bearing the liability for postemployment remuneration related to years of service prior to transfer, and the liabilities are based on the calculation of the salary when the transfer occurs, there will be a cash transaction or recording of debt between the companies. The transactions that occur in the original company and the receiving company may be in the form of debt or receivables. The receiving company would record receivables, while the original company would record a debt in the financial statements in relation to the transfer.
This Milliman study, authored by Danny Quant, Joanne Gyte, and Simon Herborn, covers the 50 companies featured in the SET 50 index as of 31 December 2556 Buddhist Era (31 December A.D. 2013). The main aim of the study is to educate and create awareness about the state of employer-sponsored long-term employee benefits programs and foster a healthy dialogue among policy builders, employers, employees, and the general public about the future of such plans in Thailand.