Portable Benefits

Reviewed by Vishnu | Updated on Sep 30, 2020

What are Portable Benefits?

Portable benefits are perks that are deposited into or accrued in an employee’s plan by the employer. Portable benefits are linked to the employee rather than the employer, meaning they can be transferred from one employer to another without any interruption in the event of a job change.

Understanding Portable Benefits

Portable benefits can be various employee-oriented plans, such as health insurances, retirement plans, and even variable benefit plans.

Unlike the defined contribution plans, which include portable benefits, defined benefit plans do not offer employees any such perks. Defined benefits plans are those that provide benefits to employees based on a specific formula that takes factors, such as the salary and employment track record, into consideration. Defined contribution plan is more of an employee-favoured plan and hence incorporates portable benefits.

Employees are required to contribute a predetermined amount or a specific percentage of their monthly salary into their pension plan after which the employer will match the percentage of the contribution made by the employee as an additional benefit. This pool of contribution is then managed by an investment advisor to generate a good return on investment at maturity, i.e. at the time of retirement.

Why Are Portable Benefits Provided?

Employers generally provide portable benefits for the following reasons:

  1. Such benefits help individuals when switching from one job to another. This can help in recruiting more employees.

  2. Individuals can feel secure when transitioning between jobs knowing that the benefit is retained.

  3. Allows individuals to make better career decisions. Also, this can help in the retention of the existing employees.

  4. Portable benefits allow employers to affiliate with contract and freelance employers in a seamless manner.

  5. Freelance and contract workers tend to continue offering their on-demand services to employers when portable benefits are offered.

Related Terms

  • Employee Provident Fund

    The Employee Provident Fund (EPF) is a retirement benefits scheme in which employees of an organisation contribute a small portion of their basic pay monthly.   Read more


  • Cost of Funds

    The cost of funds is the interest rate that financial institutions are paying on the funds they use in their business.   Read more


  • Forensic Audit

    A forensic audit is an analysis and review of the financial records of a company or person to extract facts, which can be used in a court of law.   Read more


  • Showrooming

    Showrooming refers to the practice of checking out a product in a retail store before buying it from online retailers.   Read more


  • Average Propensity to Consume

    The average propensity to consume can be referred to as the percentage of income spent on goods and services by an individual.   Read more


  • Savings

    Savings represents an individual’s unspent earnings.   Read more


Recent Terms

  • Target Risk

    Target risk assets are a class of assets that are not covered under the coverage of a reinsurance treaty or insurance policy because of a particular risk they possess.   Read more