Usually, companies provide lots of benefits to their employees to be more competitive. One of the benefits offered by companies is called an Employee Trust Fund (ETF). By the way, what is an Employee Trust Fund? Well, in this page, we will inform you about the meaning of an Employee Trust Fund (ETF).
Definition of Employee Trust Fund
An Employee Trust Fund (ETF) is a social security program which is given from company to the employees as a job benefit. Originally, it was made under the Act No 46 of 1980 by the Parliament of the Democratic Socialist Republic of Sri Lanka. Employee Stock Ownership Plans (ESOP) and pension plans are the most common forms of Employee Trust Fund (ETF). Also, the employees will receive some other benefits like health care service through the Employee Trust Fund.
In an Employee Trust Fund, the employees are called the beneficiaries, while the company is called the grantor. And, the person who manages an Employee Trust Fund (ETF) is called the trustee. Besides making payouts as necessary under the provision surrounding the trust, the trustee who has responsibility of the fund also has the ability to invest funds for helping the fund grow.
As we said before, a fund to pay for health care services is an example of an Employee Trust Fund (ETF). The employees who receive the trust and their immediate family will get assistance with health care costs. They may receive regular payments. The fund may be used to pay for insurance, it will depend on how it is organized. In this case, the trustee will determine whether to offer this benefit or not, and whether any unpaid bills will go to the employee.
We get information that government employees frequently use an Employee Trust Fund (ETF) that can collect contributions from many agencies in making the trust as large as possible. However, individuals who work in the private sector may have access to such funds through their workplaces. In a workplace, the employees can ask the company in order to have their benefits provided in this format. By the way, as an employee of the company, have you got this trust? If you have not yet got this type of trust, it is not wrong for you to try asking it.
Pension Plan – A Common Form of Employee Trust Fund (ETF)
Pension funds can be administered through an Employee Trust Fund (ETF). When the employer adds contributions and the trustee invests them, then the fund will pay out to current retirees so that they have money to survive. The retirees will get a stable income from the fund. Usually, individuals will be able to get information from human resources about the number of benefits to expect so they can plan for retirement effectively.
If the trustee fails to plan for financial events, or an Employee Trust Fund (ETF) is mismanaged, then this can lead to a serious issue. The fund may run out, making the employees who get benefits in an uncomfortable position. Surely, with retirement benefits, this will be a serious issue because the employees will count on their retirement income. Delays or reductions in benefits will be able to make retirees vulnerable to face economic hardships. They may not be able to buy all their needs. This occurs due to bad investments, or deliberate trust fund fraud. So, if you receive this type of trust, make sure you will get all benefits according to the rules that apply to the trust.
A bookworm and researcher especially related to law and citizenship education. I spend time every day in front of the internet and the campus library.
