New and affordable option for non-profits to build retirement security for their employees: The Common Good Plan
Published on 24/03/2021
Employers and workers in Canada’s non-profit and charitable sector have a new option for a workplace savings and retirement plan. The Common Good Plan is provided by Common Wealth Retirement, a Toronto-based fintech company that is on a mission to make it possible for every Canadian to achieve a financially secure retirement. It is working in partnership with a coalition of philanthropic funders and non-profit sector leaders, including Vancity, the Hamilton Community Foundation, the Metcalf Foundation, and Maytree.
We spoke with Connor Bays, Director of Employer Solutions at Common Wealth, to learn more about the plan and why it’s a good idea for non-profit organizations to invest in their employees’ financial security.
Markus: Why did Common Wealth and the other partners behind this project create the Common Good Plan?
Connor: Retirement security is a huge issue. Three-quarters of Canadians are concerned about having enough money in retirement. About a million non-profit sector workers lack access to a workplace retirement plan – that’s about half of the sector overall. And even for workers who do have access to some form of retirement benefit, often it’s fairly expensive or not of high quality.
Our mission is to make it really easy and affordable for non-profits to build retirement security for their employees. A high-quality retirement plan with matching contributions through the workplace is an effective way to build long-term employee financial health.
Markus: We’re going through a pandemic right now. Wouldn’t it have been better to wait to launch at a later date?
Connor: I think in some ways it’s actually the exact reverse of that. We think that the pandemic has made it more important than ever to address financial security for workers.
There was a survey conducted by Ipsos recently that said that 59 per cent of Canadians were worried about the effect of the pandemic on their saving and retirement plans. And 73 per cent of Gen Zers are worried about that effect. So, even the younger generation is concerned about saving and retirement planning, and giving them something that addresses that concern is a really powerful thing you can do.
Markus: What are some of the other reasons for the sector to invest in the financial security of its workers?
Connor: There are good reasons for employers to worry about financial insecurity. First, simply speaking, you are helping people do their jobs effectively. There’s good evidence that large numbers of workers are distracted on the job by issues of financial wellness and financial stress. The Canadian Payroll Association estimates that financial stress costs $16 billion a year in lost productivity for Canadian employers.
Now, helping workers with this problem is a way to make organizations more resilient and more competitive. Offering a good retirement plan, research says, can be worth hundreds of thousands of dollars to an employee. So, that’s a really efficient way to compensate employees, as part of your total compensation package.
It’s also important to boost recruitment and retention of talented employees. We often hear from non-profit organization leaders that staff will leave after a few years to go and, for example, join the public sector. And often one of the things those people point to is a lack of good benefits to keep people at those organizations.
Markus: What makes the Common Good Plan different from other plans?
Connor: One of the main differences is that the plan focuses on monthly income and helps people solve the fundamental challenge of retirement planning. Part of it comes down to what a good retirement plan looks like.
When you dig into the evidence, successful retirement planning involves addressing a number of key things: How much are you going to need each month in retirement? How much should you save to address that need? How should you invest and grow your money, managing the pitfalls of the markets? How should you optimize your taxes and your government benefits? How should you turn your nest egg into actual income in retirement? Common Good helps people build a true retirement plan that answers these questions.
We’re about 70 per cent lower in cost than a typical approach to retirement investment or saving. And it’s portable, so you can take it from job to job as well, and have a plan that you can stick with, no matter where and how you’re working, into retirement.
We’ve also partnered with SmartSAVER and Prosper Canada to provide access to additional government benefits: education savings grants using the online MySmartFUTURE application and COVID-19 emergency benefits and relief supports through the Financial Relief Navigator.
Another important element is education. We’re conducting webinars for staff. There are resources available on the website that people can access to learn about retirement planning and the different elements of doing that well. And then we also support plan members through guided enrollments and give them access to a retirement specialist to help them answer questions and set up their plan.
Markus: How difficult is it to set up the plan for an organization?
Connor: It’s very straightforward to set up. We focused on making it really easy, especially for that mid-sized or smaller employer, which doesn’t have a big HR or finance department to run programs like this.
Perhaps the most important first step is that an employer is offering the plan. But the decision that we’re often focusing on with employers is, how can you offer that match or that contribution that really encourages people to build savings over time? And we can work with employers to find a structure that works well for them. It doesn’t have to be expensive, either. If they want to start with, for example, a flat dollar match, where they’re just providing a flat thousand dollars, or whatever the number is, to help employees start saving, that’s a way to get started without creating a big cost for the organization.
In terms of other setup work and administration, it’s part of a regular payroll cycle, to run remittances and contributions to the plan. And most of the administration is done through an online, self-service digital platform that employees access on their own, to really minimize the burden on employers.
Markus: You’ve set up a few plans now already. What has the feedback been so far from the new plan members?
Connor: The feedback so far has been great. I think people have been really surprised at how easy it is to set up their plan. From the employee’s perspective, it takes about 15 to 20 minutes for people to create their personalized, automated retirement plan, that they can set and have working in the background to build retirement security for them. So, employees have been surprised at how easy and straightforward it is.
And similarly, I think many employers have been really happy with how smooth and easy it is to get set up with Common Good, and how it doesn’t need to be expensive to get a good retirement plan in place. Often, we’re helping employers do the math on what setting up a retirement plan would look like.
The best step employers can take is to book a free consultation with a plan specialist, who can work with them to answer questions, help design a plan that works for their team, and get their plan set up.
For more information about the Common Good Plan, go to www.commongoodplan.ca.