In a contributory plan, who contributes to the plan?

In a contributory plan, both the employer and employees make contributions to the plan. This collaborative funding approach serves several purposes, such as sharing the cost of benefits and fostering a sense of commitment and ownership among employees. When both parties contribute, it typically enhances the overall effectiveness of the plan, as the employer's contributions can often provide a more robust benefit structure, while employee contributions may encourage greater engagement with the plan. Employers might also match employee contributions to a certain limit, further incentivizing participation.

This model contrasts with non-contributory plans, where the employer assumes all financial responsibility, or with plans solely funded by employees. The dual contribution structure of contributory plans makes them a popular choice in many workplace settings, promoting shared investment in employee welfare.