What are 'Other Post-Employment Benefits (OPEB)'

Other post-employment benefits (OPEB) are the benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.

BREAKING DOWN 'Other Post-Employment Benefits (OPEB)'

Life insurance and healthcare premiums that a retired employee earns after retirement will most likely continue to be a taxable benefit. This will increase the retiree's total income tax payable for any given year.

A deferred-compensation arrangement is a salary agreement where the employee, based on his/her work history or performance, is paid a salary for some predetermined time after retiring. The tax consequences for such an arrangement are often unattractive to the company, as payments are not usually tax deductible.

How Other Post-Employment Benefits Are Managed

Local and federal government agencies, along with private sector jobs, may offer other post-employment benefits. State, county and municipal governments, as well as colleges and schools, might make such benefits available to their retiring workers. These benefits might be paid for in full or in part by the employer, the retiree, or a combination of the two. Making direct contributions to such benefits can expose an employer to certain liabilities. For example, if a former worker is offered health insurance coverage at the same premium rates as current employees.

Typically, a retired worker will be older than the current employees and will have a greater probability of incurring higher medical expenses. There is the potential that the health insurance coverage they are offered under OPEB will not cover the costs of their care, possibly leaving gaps in coverage. As with other forms of retirement compensation, other post-employment benefits can come under scrutiny for their cost burden on the organization and the overall return on investment in relation to the work employees perform before they retire from the organization.

Depending on how they are structured, changes might be made to other post-employment benefits. This might be done particularly if an organization wants to ease its expenses paying these ongoing costs these plans incur. Making such changes, however, can require an extensive process due to the potential impact on retirees who rely on such benefits. Organizations might establish trusts in order to help pay for the growing costs of providing these benefits. Furthermore, some organizations may be required by government regulators to report their liability for providing such benefits.

  1. Unit Benefit Plan

    A unit benefit plan is an employer-sponsored pension plan with ...
  2. Forced Retirement

    Forced retirement is the involuntary ending of one's career because ...
  3. Withdrawal Benefits

    Withdrawal benefits refer to the rights of employees with retirement ...
  4. Accrued Monthly Benefit

    An accrued monthly benefit is the earned pension benefit that ...
  5. Covered Earnings

    Covered earnings refers to the amount of an employee's pay that ...
  6. Benefit Allocation Method

    The benefit allocation method is a means of funding a pension ...
Related Articles
  1. Retirement

    3 Jobs With Good Retirement Benefits

    Jobs with retirement benefits are sought after by U.S. employees. Those retirement benefits can include pensions, 401(k) plans and other perks.
  2. Insurance

    Selecting The Right Mix Of Insurance Benefits

    Choosing employee benefits involves weighing the probability you will need them against taxes and cost.
  3. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  4. Retirement

    You Might Retire Late – But Be Ready by 62

    You may assume you're going to be one of those people retiring later in life, but you need to have a plan in case you can't work as long as you want.
  5. Retirement

    6 Benefits Of Retiring Later

    Early retirement is a pipe dream for most Americans. But the reality is, there are some perks to stretching out the lifespan of your career.
  6. Retirement

    10 Things You Must Know Before You Retire

    Don't put off your retirement planning - these 10 steps can make your later years much more manageable.
  7. Retirement

    4 unusual ways to boost Social Security benefits

    Working the system to get the highest legal Social Security benefits just got harder. Two long-time benefits strategies expired with the 2015 budget bill.
  8. Retirement

    Social Security Claiming Options for Singles

    Single retirees need to plan just as carefully as married retirees for their Social Security benefits.
  9. Retirement

    Top 3 Health Insurance Options If You Retire Early

    Early retirees will need to maintain coverage until they become Medicare-eligible at age 65.
  10. Financial Advisor

    Why Your Clients Just Might Work into Their 70s

    Your clients just might work into their 70s. Here's why.
  1. What is the maximum I can receive from my Social Security retirement benefit?

    Understand the maximum Social Security benefit amount for someone retiring at full retirement age and the basics of how benefit ... Read Answer >>
Trading Center