Workplace Pension Considerations - 30.01.2013

There is increasing concern and growing media attention paid to how much Canadians are saving for retirement. Is it enough? Should more changes be introduced to government sponsored retirement savings vehicles or should Canadians be left to pursue their own approach? 

Employers face these issues to varying degrees. Some offer savings vehicles to their employees by making a group retirement saving plan a convenient option via payroll deduction. Others also encourage employees to save by matching or making some contribution to the employee group savings plan.

A 2011 US Fidelity Investments study reveals that 55 percent of workplace savings plan members believe that if not for their workplace savings programs, they wouldn't be saving for retirement. A 2010 CLHIA (Canadian Life and Health Insurance Association) report indicates that only 50 percent of Canadian private sector workers participate in a workplace-based savings program. With 41 percent of people who aren't part of a workplace savings plan saying that they would consider changing jobs if another employer offered one, the incentive to offer a plan is difficult to ignore.

On average, employers contribute 5 percent to Defined Contribution plans. Group savings plans that see both the plan sponsor and the plan member contribute garner greater attraction and employee retention opportunities. This employer strategy warrants consideration in a time when increased talent shortages are on the horizon. 

Plans that see employer matching help employees save, but what else can make a difference to move the needle toward increased plan participation? Here are three tips to consider:
  1. Make investment decisions easy
  2. Consider mandatory enrolment or auto-enrolment with an opt-out feature
  3. Apply withdrawal restrictions

No employer is alike and therefore, plan design considerations play an important role. Contact us to design or modify your plan. We're here to help so you can focus on what you do best.