Other Post-Employment Benefits (OPEB)

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Definition of 'Other Post-Employment Benefits (OPEB)'

Other post-employment benefits (OPEB) are a type of retirement plan that provides benefits to employees after they retire. OPEBs are typically funded by the employer, and they can include a variety of benefits, such as health insurance, life insurance, and disability insurance.

OPEBs are a significant cost for employers, and they can be difficult to manage. The cost of OPEBs can increase significantly over time, as the number of retirees grows and the cost of healthcare increases. Employers need to carefully plan for OPEBs in order to ensure that they can afford to provide these benefits to their employees.

There are a number of different ways to fund OPEBs. One common approach is to use a defined benefit plan. With a defined benefit plan, the employer promises to pay a certain amount of money to retirees, regardless of the cost. This can be a very expensive approach, but it can also provide employees with a lot of security.

Another approach is to use a defined contribution plan. With a defined contribution plan, the employer contributes a certain amount of money to the plan each year, and the employee is responsible for investing the money. This can be a less expensive approach, but it also gives employees more control over their retirement savings.

Regardless of the approach used, it is important for employers to carefully manage their OPEBs. OPEBs can be a significant cost, and they can also be a source of risk for employers. By carefully planning for OPEBs, employers can ensure that they can afford to provide these benefits to their employees, and they can also mitigate the risk of unexpected costs.

OPEBs are a complex topic, and there are a number of different factors that employers need to consider when making decisions about OPEBs. Employers should consult with a financial advisor to get help with making these decisions.

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