Why Offer a Group Pension Plan?

Most employers report that hiring and retaining good talent is a never-ending challenge. Even in times where unemployment rates are somewhat higher, attracting and keeping the right people is not easy. Group benefits have and continue to be a major tool for increasing the perceived value of employment and getting the best employees through the door.

Retirement pensions have represented a major aspect of employee benefit plans in North America for well over a century, beginning with plans created in the late 19th century by the railroad companies and spreading to major utility companies and financial institutions by the beginning of the 20th century. Once the purview of large, well-established companies, in the last thirty years, development in product offerings and in some provinces legislative directives have expanded the availability of retirement pension plans to even very small employers. Despite this, the actual penetration of retirement plans in the overall working population is decreasing, theorized by some as being due to the growth in the Gig Economy, and the increase in casual and temporary employment arrangements.

For employers who value stable personnel, having the benefit of a pension program is likely a critical tool. However, once this decision is made, how does management determine the best type of plan for their needs? If a plan is in place, how does one evaluate if it is still the best plan for the company?

Goals and Objectives

As with most evaluations, one must begin with the purpose that is to be served by the tool. There is no denying that pension plans are a good thing for most companies, but WHY does THIS company want to have one?

Company Values

For some employers, a main reason for having a plan is to acknowledge and reward employees for their contribution and loyalty offering a plan because it is “the right thing to do”. In this case, the pension offering is a reflection of the values of the company and its management, at least at the moment the plan was established.

Attraction and Retention of Talent

Making employment opportunities attractive to qualified candidates is a constant challenge. Further, it is generally accepted that the cost of establishing a new employee is significant, including the time of the people helping in the transition and reduced productivity during the integration period. It is in everyone’s best interest to have a stable workforce.

Legal Obligations

As the attention of lawmakers has started to turn to the long-term prospect of an aging population, some changes to pension legislation increasingly will aim to encourage long term investment in retirement income. For example, in Quebec, any employer with 10 employees or more MUST offer some sort of savings accumulation plan to encourage their employees to save for their retirement. As legislation continues to evolve, similar obligations may be put into place in other jurisdictions.