The federal government should require companies to offer workplace pensions like the new pooled-pension program being developed in Canada, business owners say in a new survey.
A poll of 800 companies by an insurance industry association shows 68 per cent of small- and medium-sized company employers that don’t currently offer a pension plan are interested in participating in the government’s voluntary new Pooled Registered Pension Plan (PRPP) program, which will allow workers to set aside money through payroll deductions in a pension savings fund.
The program has been designed to help the majority of private-sector workers in Canada who have no workplace pension plan to supplement their personal savings for retirement.
The survey also found 71 per cent of those surveyed agreed that it should become mandatory for employers to offer some form of retirement plan to workers, especially since PRPPs will be a low-cost alternative.
“We are on the cusp of making a fundamental shift in the pension landscape,” said Frank Swedlove, president of the Canadian Life and Health Insurance Association.
The poll found that 79 per cent of companies that already offer a pension plan believe participation in a pension plan should become mandatory in Canada, but support was also strong – at 66 per cent – among those who do not have a pension plan.
“These savvy employers know a good thing when they see it,” Mr. Swedlove said.
The federal government introduced its legislation in November to create PRPPs, which will be managed by private-sector financial firms, including large insurance companies. They will offer defined-contribution style pension plans to workers, so payouts will vary based on investment returns and workers do not get a guaranteed income in retirement.
Workers can opt out of the programs, and companies will not be required to participate. Firms will also have the choice of whether or not to add extra money into the plans as employer contributions.
Two-thirds of those surveyed believe their employees will be interested in participating in the new PRPP program. While companies are not required to also contribute to PRPPS on behalf of their workers, 73 per cent of those polled said they will “look at ways their business could contribute” beyond their employees’ contributions.