By: Healthcare of Ontario Pension Plan (HOOPP)
A new research paper from the Healthcare of Ontario Pension Plan (HOOPP) and Common Wealth suggests that good workplace retirement plans are key to attracting and retaining new employees, and helping reduce the financial stress of employees.
"Many businesses may be asking what will set them apart in recruiting valuable talent. Our research suggests retirement savings plans can provide that competitive advantage," says Steven McCormick, SVP, Plan Operations at HOOPP.
Alex Mazer, co-founder and co-CEO of Common Wealth, agrees. He notes that a common perspective from HR professionals is that retirement benefits are something to be added after other employee benefits are in place. "But there is often a strong business case for putting retirement benefits in early as part of a total compensation package," says Mazer.
The paper, The Value of a Good Pension: The business case for good workplace retirement plans, is based on 25 interviews with Canadian employers, industry and academic experts, a review of industry and academic literature, and modelling to assess the business value of offering retirement plans.
Many of the employers interviewed said retirement benefits differentiate them as an employer and if they didn't offer them, they would be significantly less attractive to prospective hires.
Other studies have drawn similar conclusions: HOOPP's 2021 Canadian Employer Pension Survey of more than 800 Canadian employers found that employers who offer retirement benefits say they are very or extremely important to recruitment (83 per cent) and retention (86 per cent).
The 2021 Canadian Employer Pension Survey found that workplace retirement savings can reduce financial stress for employees. Eighty-five per cent of employers offering retirement benefits said they were important to helping employees manage financial stress.
A 2014 study from Manulife also found most employees valued a group retirement plan as much as extended vacation, and a majority who belong to a workplace group retirement plan agreed it increased retention and loyalty towards employers.
When employees don't need to worry about setting aside money to save for retirement on their own, they can take home thousands of dollars more in pay each year without sacrificing their retirement security. This means employees are better able to focus on their day-to-day work, knowing their retirement is secure; and employers can enjoy improved talent attraction and staff retention.
The report closes with six questions for employers to ask themselves to help improve the value for money their plan delivers, including: how can we encourage better and more automatic saving behaviour among employees? And, how can we lower fees and costs associated with our plan?
Mazer recognizes these have been challenging times for businesses of all sizes; however, he believes there is a case to be made for more employers to adopt retirement plans when the economy begins to recover from COVID-19. "Improved retirement outcomes for more Canadians would be good for the economy, good for business and good for employees' financial health," says Mazer.
HOOPP regularly commissions research about improving retirement security for Canadians. This research helps us fulfill our pension promise by raising awareness of the value that good pension plans like HOOPP bring to our members, the communities they live and work in, and the economy.
Visit hoopp.com to read The Value of a Good Pension: The business case for good workplace retirement plans.