Why group retirement plans make organizations so attractive to workers
Published on 17/05/2022
Are you looking to acquire and retain top talent? There’s a simple organizational upgrade. You might be surprised to learn that offering a group retirement plan could be one of the most successful tools in your human resources efforts.
The ultimate “attract and retain” strategy
It’s no secret that the COVID-19 pandemic has caused a great upheaval in the Canadian job market. Some even refer to the current employment climate as the “great resignation.” People are looking for new jobs, turnover rates are up, and organizations are placing a greater emphasis on “recruit, reward, and retain” strategies.
An effective solution can be to offer workers what they consistently say they want: retirement benefits.
In fact, a survey by Accenture found that 78 per cent of job candidates view retirement benefits as a critical factor in deciding whether to accept a job.
And it gets better: When it comes to rewarding your employees, another survey found that 71 per cent of Canadians would be willing to forgo a wage increase for a workplace retirement plan.
Finally, according to a national employer survey, the best way to retain employees is to pay them more. No surprise there, but a (very) close second is to offer a retirement plan. And offering such a plan could be a far more affordable option for those organizations with budgetary constraints.
A good group retirement plan maximizes savings and minimizes costs
A study from the HOOPP Pension Plan, the National Institute on Ageing, and Common Wealth found that access to a good retirement plan can lower the cost of saving for retirement by almost $1 million for an average worker.
Most Canadian workers manage their retirement savings on their own and pay some of the highest management fees in the world. Often, they lack the discipline to set aside a certain amount from each pay cheque, and, when they do, find it hard to figure out how they should invest.
They don’t know how much they need to put away each month for retirement or how much they’ll have per month when they retire, or even how much they will receive from the government per month. They often don’t embrace the strategy of reducing the risk of their investments as they approach retirement.
A group retirement plan can solve some of these issues. People are many times more likely to save for retirement – and get more bang for their buck from their savings – if they are part of a group retirement plan for several reasons. Some of the reasons are:
- Organizations often offer matching contributions;
- Group retirement plans charge lower fees than what traditional banks and insurance companies would charge;
- A portion of every pay cheque comes out automatically which leads to better savings discipline; and
- People are less likely to make poor investing decisions.
The true value: retiring in dignity
As a society we must ensure that Canadians, particularly those in the low and moderate pay range, have access to group retirement plans to ensure that they can retire in health, happiness, and security. If we can do this, we will create a virtuous circle whereby people in retirement feel secure and can continue to be part of the community.
In 2018, Maytree and several other funding organizations partnered with Common Wealth Retirement to develop a retirement plan specifically catered to small and medium-sized non-profits. Our task was to create a plan for small and medium-sized non-profits that set workers up for success by helping members create a true plan for retirement that was simple, easy to understand, with fees much lower than those offered by the traditional banks and insurance companies.
The result was Common Good, a plan that has already won awards for its design with fees that are less than one third of what the average Canadian pays.
To find out more about how the pandemic has changed the game when it comes to the business case for workplace retirement benefits, read Common Good’s latest eBook, “How COVID elevated retirement benefits to a top recruiting and retention tool.”
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