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A significant number of large corporations have provisions for retirement benefits for its employees who have been in service for longer periods and are about to retire during the normal retirement age and those who retire early due to unavoidable reasons. The underlying objective for offering retirement funds to employees to provide financial support and security to financial support during their old age (Kolb, 2008). It is usually a form of thanksgiving from the corporation due to many years of dedicated service. Ethics in retirement plans by large corporations is a contentious subject since the Federal law disposes such decision to the corporation itself making it difficult to challenge corporations in such matters. The challenge comes in when corporations fail to provide the benefits already outlined in their organizational structure. Retirement plans are usually optional strategies that corporations can opt to implement. In most cases, large corporations have ethical obligations that outlines how the company should achieve the retirement benefits as outlined in their sendoff plans. The most common trend in providing retirement benefits to employers is that, corporations are deploying employer match strategies during the implementation of the retirement benefits plans. For instance, a company may select a percentage that matches the employees' contribution to the success of the company during the course of his/ her service to the company. Therefore, ethical obligations compel large corporations to continue offering such benefits unless the company experiences a major financial meltdown (Mitchell, 2004). This essay attempts to investigate whether companies have the ethical obligation to offer retirement benefits. In addition, the research also investigates whether the financial condition of the corporation plays a significant role in determining the provision of retirement benefits.
Retirement benefit plans form an integral part of the organizational structure. This implies that offering retirement benefits to employees play a significant role in upholding the corporate image of an organization. In addition, it is one of the strategies that corporation can use to attract a pool of workforce, which in turn enhances the competitiveness of the corporation. It is evident that implementing pension and retirement benefits plan is one of the most effective strategies that a company can deploy in order to ensure a bright future for its employees and the company itself (Tomkiel, 2007). The motivation of the present workforce depends on the assurance that they will have a secured financial life upon retirement. It is therefore important for corporations to ensure that the top-level management does not do away with the stipulated retirement benefits. It is important for large corporations to safeguard the social life and financial life of the employees not only during their employment age, but also during their retirement age. If a large corporation is successful, it has the responsibility to give credit for its success to its workforce. One of the most effective approaches to give credit to employees is to implement retirement benefits plans. Therefore, this implies that large corporations have the ethical responsibility of providing retirement benefits to its long-serving employees, who played a significant role in ensuring that the company was successful (Tomkiel, 2007).
Business ethics and social responsibility are intertwined elements that corporations need to focus on. This means that large corporations have to align their organizational ethics with goal of achieving social responsibility. Another important aspect of the retirement benefits is that once corporations have agreed to offer such benefits, it is important for the company to keep its word. The business practices of the corporation should base on ethical principles. For instance, if an organization has been implementing retirement benefits plans during the course of its existence, it has ethical obligations to continue offering such benefits to the current employees unless the company is facing serious financial burdens that are threatening the operations of the organization (Mitchell, 2004). The underlying principle is that it is important for corporations to uphold their obligatory payments to their retiring employees, as a means of fostering social responsibility. Despite the fact that corporations are at liberty of continuing or terminating retirement benefits plans, they have the ethical responsibility of ensuring financial and social security for their employees (Mitchell, 2004). With this regard, large corporations have no justifiable reason to deny its employees retirement benefits, yet the workforce is solely responsible for the success of the organization. Ethical business practices entails appreciating the roles that employees play in the realization of the long-term goals and objectives of the organization. It is therefore important for large corporations to implement strategies aimed at rewarding the employees towards their contribution to the corporation. Therefore, large corporations have the ethical responsibility of implementing rewarding schemes such as retirement benefits plans (Kolb, 2008).
An important aspect of corporate governance is that corporations have the legal responsibility of meeting their financial responsibilities. Implementing retirement benefits is one of the most important corporate responsibilities that a corporation should lay more emphasis on. With this regard, corporations have to choose the retirement plan benefits that best suits the company in terms of its financial status and the fiduciary obligations. Ethical obligations at the corporate level require that companies have to put the financial and social welfare of its employees into consideration (Tomkiel, 2007). As a result, there is need for the company to motivate its employees to save for retirement, and offer a combined effort during the implementation of such programs. Some of the approaches that large corporations can deploy include the defined benefit plans, which may be funded or unfunded and employment-based pensions. Funded benefits are because of the company setting aside funds payable during retirement basing on a fixed formula. For instance, a company may use salary amounts and the duration of service to the company by the employee to determine the benefits payable during retirement. In an unfunded benefits scheme, the corporation does not set aside funds payable during retirement, rather, it is the responsibility of the employees to participate in a retirement saving scheme (Kolb, 2008). In either way, the participation of the company is required in realizing the effectiveness of the retirement benefits scheme. For example, if a company does not have enough finances to offer funded retirement benefits, it should involve itself in motivating and providing necessary support to its employees towards saving for requirement.
The financial position of the corporation also plays a significant role in the implementation of retirement benefits by companies. Successful corporations have the ethical obligation to ensure that they reward the workforce that is principally responsible for the success of the organization. Long-term retirement benefits strategies are an important strategy for the organization to reward its employees in terms of ensuring financial security after their retirement form the corporation. The ethical considerations in this context demand that corporations should not terminate the provision of retirement benefits to its employees. In addition, failure to adhere to the stipulated policies concerning retirement benefits can cause legal problems to the company. For instance, employees sue the corporation for grievance with the respective labor department (Tomkiel, 2007). This means that the state might request for an audit of the corporation's business practices, which may in turn have negative consequences to the company such as closure, payment of huge sums to the employee and ultimately spoil the corporate image for the company. It is therefore imperative that large corporations have an ethical responsibility to offering retirement benefits for the sake of corporation's growth and financial security of their employees. It is important to note that the provision of such benefits is mutual to both parties, which are the corporation and its employees (Kolb, 2008).
In cases whereby the corporation is in a financial turmoil, the company has a justification in failing to provide the retirement benefits. It is imperative for corporations to evaluate their financial position before embarking on retirement benefits plans in cases where the company used a funded benefit strategy. A fundamental principle is that rewarding employees bases on their contribution to the organization. A financial meltdown in the corporation implies that employee's contributions to the organization was not fulfilling. In fact, the corporation should use the current financial status to serves as a motivation for the employees to improve the financial performance of the organization in order to guarantee their financial and social security after retirement. The most affected retirement benefits scheme by financial position is the funded retirement benefits scheme. Therefore, a corporation's financial position plays a significant role in determining the way a company should implement its retirement benefits plans (Tomkiel, 2007).
It is evident that corporations have the ethical responsibility of offering retirement benefits to their employees, owing to the fact that the workforce is important in fostering the success of the corporation. In addition, retirement benefits are one of the most employee rewarding schemes that a corporation can adopt. In a broader perspective, the implementation of retirement benefits scheme is somewhat beneficial to both the corporation and its employees. Despite corporation having the ethical obligation of offering such benefits, the financial position of the corporation is as an exception is such scenario (Tomkiel, 2007). This is because the financial position reflects the employees' commitment in realizing the success of the corporation. As a result, corporations that are performing well financially have the ethical responsibility in rewarding their employees in the long-term through retirement benefits plans.