Term · Explained
End-of-service benefit (gratuity, severance)
A payment to an employee on leaving after a period of service, called gratuity, severance, or end-of-service pay depending on the country.
Read more All hr glossary
Pay & benefits
Pension and retirement contributions
Savings schemes for retirement to which employees and employers contribute - such as pension funds, provident funds, 401(k) plans, or national social security.
- Topic
- Pay & benefits
- Read time
- 2 minutes
- Level
- Beginner
- Applies to
- HR teams and employees
What it means
Most countries have a statutory or employer-run scheme in which a percentage of pay is set aside for retirement, often with a matching employer contribution. Names, rates, limits, and who is covered differ by country and change over time.
Benefits
- Helps employees understand their pay and benefits.
- Reduces payroll questions to HR.
- Builds trust through clarity.
- Helps compare offers correctly.
Example
- An employee contributes 5% of salary and the employer adds 5%, both paid into a retirement account.
Related terms
- Social insurance
- End-of-service benefit
- Employer contributions
- Vesting
Rates, limits, and rules (for example for pensions, social insurance, and end-of-service pay) differ by country and company and change over time. Treat these as general explanations and confirm the current position where you operate before relying on them.
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