The single-employer trust was reborn

Rather amazingly, the 1990's (the last decade of this fifty-year odyssey) finds governments --- the original instigators of the trusteed benefit concept --- moving their employee-benefit programs to trusteeships. Even they (governments) have been sufficiently affected, by the complexities of their making, to choose a now-popular solution … the inter vivos trust.

Much can be said about the philosophical motivations that have driven the development of benefit trusts over the past half century. But, those motivations are as varied as the participants in the process, and, likely, of little consequence to the bystander contemplating involvement for the first time. What is of consequence, to all, is economic gain … particularly at this tenuous crossroad of financial restraint and heightened public demand. Doing more for less is the unavoidable imperative, of today.

When compared with the combined results of several benefit plans, operated separately, a single benefit trust, performing the same operations collectively, can guarantee meaningful savings. The following reasons apply.

  • All purchases enjoy higher discounts.
  • Professional fees are minimized.
  • Operating fucntions, otherwise performed separately for each plan, are done once.
  • Insurance reserves may be eliminated, or may be held and invested within the trust fund.
  • Surplus may be manipulated to minimize or eliminate tax.
  • Investment returns may be increased through direct placement in a wider range of choices.

Once the capacity for savings is understood the potential users of the benefit-trust arrangement, can assess the particular value that flexibility, credibility and enhance longevity, hold for them.