The “Retirement First” approach to employee benefits is key too

TORONTO, Nov. 16, 2021 (GLOBE NEWSWIRE) – A new research report from the Healthcare of Ontario Pension Plan (HOOPP) and Common Wealth, The Value of a Good Pension: The Business Case for Good Workplace Pension Plans, suggests that a “retirement first “approach to workplace performance can be key to a company’s ability to attract and retain talent and improve productivity.

The report extensively examines how companies can better serve their employees as well as their own bottom line by offering retirement plans. The results result from an in-depth analysis that included: a review of the industrial and academic literature; 25 interviews with Canadian employers (representing a cross section of companies and other organizations), industry and academic experts; Modeling to assess the business value of offering retirement plans; and HOOPP’s 2021 Canadian Employer Pension Survey of 800+ Private Sector Employers.

“There was recently talk of whether Canada will see a ‘big resignation’ from employees who quit their jobs to get better performance and pay,” said Steven McCormick, SVP, Plan Operations at HOOPP. “Many employers may be wondering what sets them apart when it comes to recruiting valuable talent. Our research suggests that retirement plans can provide that competitive advantage. “

Common Wealth Co-Founder and Co-CEO Alex Mazer notes, “A common view among HR professionals is that retirement benefits are not added until health benefits and other employee benefits are in place. But there is often a strong business case for including retirement early as part of an overall compensation package. “

Many of the employers surveyed stated that they are different from retirement benefits as employers and if they did not offer them they would be significantly less attractive to potential employees. Other studies have confirmed this:

  • The 2021 Canadian Employer Pension Survey found that the vast majority of employers who offer retirement benefits say they are very or extremely important to hiring (83%) and retention (86%).
  • According to the 2021 Canadian Retirement Survey, seventy-nine percent of all retired and non-retired workers said that retirement is important to keeping a job attractive.
  • A 2014 study by Manulife found that a majority of employees valued a group retirement plan as much as they enjoyed extended vacation, and a majority on an occupational group retirement plan agreed that it increased loyalty and loyalty to employers.

HOOPP’s 2021 Canadian Employer Pension Survey also found that company pensions can reduce financial stress for employees, resulting in improved productivity. Seventy-three percent of employers said financially stressed workers were less productive, and 85% of employers offering retirement benefits said they were important in coping with stress among workers.

This notion is reinforced by the 2013 report Scarcity: Why Too Little Means So Much by behavioral researchers Eldar Shafir and Sendhil Mullainathan. They found that there was a causal relationship between financial scarcity and mental function, and that dealing with financial worries provided fewer cognitive resources to guide decisions and actions.

According to the Canadian Payroll Association, the financial stress of productivity losses costs Canadian employers approximately $ 16 billion annually. Meanwhile, a 2017 Pricewaterhouse Coopers report showed that some financially stressed employees can affect company performance; Almost half of the distracted employees reported spending three hours or more a week on financial affairs.

This latest report builds on HOOPP and Common Wealth’s 2018 report, The Value of a Good Pension: How to Improve the Efficiency of Pension Savings in Canada, which found that there are five value drivers that drive saving make retirement easier and more efficient for individuals: savings, fees and expenses, investment discipline, fiduciary management and risk pooling. More value drivers that are included in a pension plan contribute to higher compensation efficiency. This new report examines the benefits of improved pay efficiency from the employer’s perspective.

By modeling different types of plans, the report shows that for an employer looking to maximize the lifelong financial value of its employees, company pension models that take into account the five value drivers can significantly increase compensation efficiency, especially when all five are in one plan are. like a Canadian retirement plan. If an employer offered a Canadian-style retirement plan, rather than no retirement plan at all, being a representative employee could increase salary available for other purposes (ie, non-retirement) by an average of 69%.

McCormick said, “Employees with high quality plans can take home thousands of dollars more each year without affecting their retirement savings. Employees are happier and more focused on their daily work knowing that their retirement is safe; and employers can look forward to improved productivity and employee loyalty. “

The report concludes with ideas that employers should consider when looking to improve retirement outcomes for employees. Suggestions include:

Take a “retirement first” approach to employee benefits

The Canadian Employer Pension Survey found that retirement benefits rank higher in terms of attractiveness, retention, and financial burden than benefits such as health and dentures. This suggests that employers should make a retirement plan one of the first benefits they offer, rather than waiting until they reach a certain size to introduce a plan.

Focus on value for money

The report outlines six questions companies can ask themselves to improve the value for money on their plan, including: How can we encourage better and more automatic savings among employees? And how can we reduce the fees and costs associated with our plan?

Mazer said, “We appreciate that these times have been challenging for companies of all sizes. But as we step into the post-COVID economic recovery, there are arguments for more employers to embrace retirement plans. Improved retirement results for more Canadians would be good for the economy, good for business and good for the financial health of workers. “

About the Ontario Healthcare Retirement Plan

HOOPP serves Ontario’s hospital and community health sectors with more than 610 participating employers. Its members include nurses, medical technicians, hospitality staff, housekeeping staff, and many others who provide valuable health services. In total, HOOPP has more than 400,000 active, deferred and retired members.

HOOPP works as a private, independent trust and is managed by a board of trustees with sole fiduciary duty to meet the pension commitments. The board is jointly chaired by the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses ‘Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees’ Union (OPSEU), and the Service Employees International Union (SEIU). This governance model provides representation of both management and employees in support of the long-term interests of the plan and its members.

About common wealth

Common Wealth is a rapidly growing financial technology company providing portable group retirement plans to small and medium-sized businesses, nonprofits, professional associations, unions, and a host of other plan sponsors and partners. Its retirement technology platform and plans have received awards from Pensions & Investments and Canadian Investment Review. The Common Wealth platform integrates retirement planning, guaranteed lifelong income, behavioral savings techniques, and tax and benefit optimization strategies, and offers plan members a digital retirement plan for life.

To broaden its mission, expand access to retirement planning and support its evidence-based plans, Common Wealth has published original, globally recognized pension research in collaboration with organizations such as the World Bank, the Aspen Institute and some of Canada’s largest pension organizations. . The company also pioneered Canada’s first low-income pension plan, in partnership with SEIU.


James Geuzebroek, Senior Manager, Media and Public Affairs, [email protected]

Comments are closed.