Let’s make retirement planning and saving a reality for non-profit sector workers

February should come with more than just weather warnings. If you’re leading a non-profit organization in Canada, you should be warned that your staff may be more distracted this time of year. They may even seem distressed.

Throughout February, our media are filled with messages about the need to contribute to a Registered Retirement Savings Plan (RRSP) and save for retirement. For many people working in non-profit organizations, while this is a message that may ring true, it is also one that reminds them of another reality: they just don’t have the means to do so.

And even if they had the means, many wouldn’t know how to go about planning for their financial future, whether it’s through a workplace retirement plan or setting up a plan of their own.

Currently, there’s no national sector-wide retirement savings plan offered for the almost two million people working in non-profit organizations across Canada. Roughly 850,000 have no access to any type of workplace plan at all. A significant portion of these workers are women and lower- and moderate-income Canadians.

Even where retirement benefits are offered, the sector’s growing population of part-time and temporary contract workers are often ineligible to join these plans. Approximately 47 per cent of the sector is employed in part-time or contract arrangements, compared to 12-18 per cent of the broader economy. As a result, many non-profit sector workers are not actively saving for their retirement and are concerned for their future financial security.

It’s not that non-profit organizations don’t want to support their staff in building financial security. But due to the risk of funding shortfalls and the burden of plan administration, they cannot offer formal pension programs for fear of creating future liabilities they may be unable to meet. Smaller and mid-sized employers tend to be particularly challenged in contributing to their staff’s retirement funds, let alone setting up a plan on their own.

According to a recent article in HR Reporter, many Canadian workers struggle with conflicting financial priorities, feel unprepared for retirement, and wish they had started to contribute earlier. But they also feel that they lack the knowledge to determine what the right steps are to start saving for their retirement.

It’s no wonder that many never get around to it – or do so much too late.

But there is a solution for non-profit sector workers and their employers who want to ensure that their staff can plan for retirement.

To address the dearth of adequate savings options for workers in Canada’s non-profit sector, a coalition of non-profit sector leaders and retirement security experts are working together to create Common Good – a portable, national, sector-wide retirement plan tailored to the needs of non-profit workers.

Common Good combines the principles of the world’s best pension plans with a more flexible design to reflect the needs of today’s non-profit workforce. It can also support non-profit employers of all sizes who are interested in offering a high-quality retirement program for their employees, especially those who find it challenging to offer such a program on their own.

While Common Good will offer advantages to non-profit workers of all income levels, its most significant impact will be in building long-term financial security for workers with incomes under $50,000, and for part-time and contract/freelance workers of all income levels, for whom there are currently few good options available for building retirement security.

The plan is structured around a Group Tax-Free Savings Account (TFSA) for all members, and a Group RRSP for members with higher incomes. The TFSA component is especially appropriate for lower- and moderate-income workers because withdrawals from a TFSA do not lead to significant clawback of federal Guaranteed Income Supplement (GIS) benefits after retirement.

Established as a non-profit corporation, Common Good will be overseen by a board of directors with a legal duty to put plan members’ interests first. To date, more than 70 employers from across Canada have committed to offering the plan when it is made available. Five foundations (including Maytree), the credit union Vancity, and an 18-member “Champions Council” are also supporting the effort, in partnership with Common Wealth, a retirement security firm, and an advisory group of pension and retirement security experts. With the right support, Common Good could be available as soon as the end of 2019.

As a non-profit leader, you can contribute to your staff’s peace of mind by joining the growing coalition of organizations committed to offering Common Good. Make sure your staff will have access to a retirement plan that will make their Februaries less stressful and their retirement a time to look forward to.