Conventional wisdom has it that when the economy is shaky, employers have an easier time finding good people to work for them. But Bruce McLeod, vice-president of human resources for Bioniche Life Sciences Inc. in Belleville, Ont., knows this isn’t always the case.
“Despite the situation with the current economy, we know we are still going to be facing a reduction in the availability of talented people,” says Mr. McLeod, whose company employs more than 200 workers. “A lot of people we hire are scientists, technicians and technologists with specialized knowledge, so it’s critically important for us to attract the right talent and be able to retain them.”
About 15 years ago, to give itself an edge in its industry’s highly competitive labour market, Bioniche Life Sciences decided to add a retirement plan to its compensation package. After considering a registered pension, such as a defined benefit or defined contribution plan, the company chose to go with a group RRSP where employees can put in money and Bioniche would match their contributions.
“The administration costs to run a full-fledged pension plan was too much for us, especially at the time when we didn’t have as many employees as we have today,” says Mr. McLeod. “The RRSP plan is working very well for us.”
Like Bioniche Life Sciences, SMBs that want to provide for their employees' retirement may feel they cannot afford a pension plan. But they have options, say experts.
Thomas Wilson, an economics professor at the University of Toronto’s Rotman School of Management, says one solution would be for SMBs to have a pooled pension plan, which would allow them to achieve economies of scale. This could be done through industry groups or professional associations.
In fact, in a similar vein, the federal government has recently proposed a pooled registered pension plan, which would be administered by a regulated financial institution. While the PRPP is aimed at employed and self-employed Canadians who don’t belong to an employer-sponsored pension plan, it could also work for a small business owner. A summary of the proposal on the Department of Finance Canada website actually includes a scenario depicting a small business owner named John, who wants to offer a pension plan for his 10 employees.
Many small- and medium-sized businesses in Canada view retirement plans for their employees as an important part of their hiring and retention strategy. Various studies certainly support this thinking. A survey last year by Environics Research Group found 89 per cent of working Canadians want workplace savings plans made available to all workers, and 41 per cent would consider moving to an employer that offered one.
In a study of defined benefit plans published this month by Toronto-based Grant Thornton LLP, an audit, tax and advisory services firm, close to 60 per cent of the 879 employees interviewed said their pension and retirement package was an important factor in their decision to join their company.
“The question of retirement and how you can achieve the retirement lifestyle you want is a universal question that concerns many Canadians,” says Regina Baezner, a principal in the pension and benefit practice at Grant Thornton. “Employers who are able to provide some tools or means for their employees to reach their retirement goals are likely to be more competitive in the talent market.”
For employers determined to provide for their employees’ golden years, pension plans make sense because, unlike RRSPs that can be pulled out any time, pension funds cannot be cashed out until retirement. But pension experts say this logic doesn’t always wash in a small or medium business.
