Welfare and Pension Plans, in the United States, plans maintained by employers separately, or by employers and employees jointly, to provide life insurance, accident-and-health insurance, pensions, or other benefits for employees. Sometimes such plans are called private, or voluntary, employee-benefit plans to distinguish them from the types of social insurance required by law or administered by the government, for example, social security and workers’ compensation.
Welfare and pension plans received their greatest impetus during and immediately following World War II. Among the reasons for this development were the wartime freeze on wage increases, while so-called fringe benefits were permitted; the tax-exempt status of employer contributions to pension funds; and a ruling by the National Labor Relations Board that welfare benefits were a proper subject for collective bargaining between employers and employees.
Almost all plans provide some type of hospitalization insurance for workers as well as for their dependents. Among other benefits are reimbursements for necessary surgical and medical care, life insurance coverage, temporary disability insurance, and accidental death and dismemberment insurance (see Health Insurance). In addition, a large segment of the civilian labour force is eligible for at least partial retirement benefits (Retirement Plans).
The various welfare and pension programs account for a significant share of the American wage earner’s insurance protection, supplementing such public programs as old-age and survivor’s insurance and Medicare under the social security system; unemployment compensation insurance; and workers’ compensation. See Medicare and Medicaid; Unemployment Insurance.
Welfare and pension plans vary in financing, insuring, and operation. They may be administered solely by an employer or labour union or by trustees from each side. Plans may be financed completely by the employer or by joint contributions from employers and employees. Payment of benefits may be guaranteed by an insurance company or the plan may be self-insured—that is, it may accumulate reserves to meet anticipated payments. Pension plans, in particular, utilize a wide variety of methods of operation.