Ontario Pension Plan

Nov 21: BEST FROM THE BLOGOSPHERE

November 21, 2022

Employers top fear is losing employees; some see retirement benefit as a retention tool

New research from the Healthcare of Ontario Pension Plan and the Angus Reid Group finds that the top concerns for Canadian employers this year are “employee burnout and losing staff,” according to a HOOPP media release.

And, the release notes, “while employers recognize the value of retirement benefits for addressing these concerns, the current high-inflation environment is driving them to favour wage hikes instead.”

The research involved 778 Canadian business owners with 20 or more employees, the release states.

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” states Steven McCormick, SVP, Plan Operations, HOOPP, in the media release. “It is arguably more important than ever for leaders – in business, government and the retirement industry – to take measures that will help workers save for retirement, even when it’s challenging to do so.”

And, the release continues, 17 per cent of the organizations surveyed had indeed improved or introduced retirement savings plans in the past year, or “plan to do so in the year ahead.”

The other good news found through the research is a feeling of optimism among business owners about their prospects, the release continues. Eighty per cent said they “are optimistic about their business’ success over the coming year,” the release tells us.

“What they’re worried about is employees, with leading concerns being: greater competition for hiring (82 per cent), employee burnout (79 per cent), labour shortage (79 per cent) and high turnover (77 per cent). A strong majority are also worried about inflation (82 per cent),” the release notes.

That’s why, the release continues that 67 per cent “favour wage increases over benefit enhancements” as the best way to “mitigate” inflation’s impacts for employees, while 71 per cent see wage increases as the best “means to attract new employees.”

“Some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” states Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group in the release. “The survey found some significant correlations between benefits and a happy, productive work force.”

Sure, wage hikes are great in the short term, but it’s the long term most people should be worrying about. When you leave the workforce, you’ll still need money to pay your bills, and benefits from the Canada Pension Plan and Old Age Security are pretty modest. Having a workplace pension plan equips you for that future – you’ll probably be able to stop working earlier, and you’ll enjoy a higher level of retirement income security.

We often note that for those of us without a retirement program at work, the Saskatchewan Pension Plan provides everything you need to create your own plan. But that’s also true if you are an employer thinking of offering a retirement program for your employees. SPP can make it easy for you to provide this benefit, which helps retain your employees in a time when staff shortages are the norm. Contact SPP for information on how you can offer our pension plan to your employees!

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Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Answering the age-old question – what retirement has been like?

August 11, 2022

We are frequently asked by former colleagues and friends still labouring in the workplace what retirement is like. It’s a somewhat difficult question to answer, but Save with SPP will give it a whirl in the hopes it helps others plan things out.

It seems impossible to imagine not working when you are, in fact, working. We think of vacation or long weekends as “time off,” but with all of those there is that last-day little ripple of dread – oh dear, one more afternoon in the sun and it’s back at work. So, retirement is not like that.

We had a lot of adjustments to make to transition from full-time work to receiving a pension and working as a freelancer. First, there was shutting down the rental condo in T.O. that was needed for this guy to work in Toronto during the week and be home in Ottawa for the weekends. We bought in Ottawa and rented in Toronto. So, retiring from the Toronto job meant packing up the little condo, giving notice, disconnecting cable and phone, and ending years of frequent train travel between points. That was a huge savings in our monthly budget – we went from two of everything to one of everything.

That helped, because even a very good pension only provided about half of what we had made at work. Getting less to live on was hugely offset by a drop in living costs; we were lucky in that regard to have had a very good work pension from the Healthcare of Ontario Pension Plan.

The boss retired from working at an Ottawa hospital the next year, but at time of writing is still working at a different hospital.

The Saskatchewan Pension Plan figures into both our retirement plans, and here’s how.

When we bought the house in Ottawa, we were engaged but not yet married, and that allowed us to take part in the Home Buyers’ Program. While looking around for a place to repay the money we had withdrawn for the house, we discovered an article by our friend Sheryl Smolkin, and loved the idea of a plan that resembled a registered retirement savings plan (RRSP) but had the additional extra feature of an annuity. The fact that it was not-for-profit and had far lower fees than a retail mutual fund was another sell. So, this guy was in.

Our own SPP account now represents more than twice what we took out for the house, and we add to it annually. Once we are fully retired – maybe in five years – we’ll start collecting it!

The boss soon found that working three or four days a week AND drawing a pension created a big of an income tax headache – the paying kind. So, we got her to sign up for SPP, and began contributing annually while also transferring money in from her various RRSPs. The tax-deductible SPP contributions fixed a tax problem and helped turn balances owing into refunds.

When she retires in February, part of her retirement earnings will be a monthly SPP annuity of about $500. That’s going to be a big help for her, as it will add to her retirement earnings and narrow the gap between what she made before she retired and what she is making after.

We have learned a few important things in this process.

  1. When comparing your before-retirement income to your after-retirement income, be sure to do a net-to-net comparison, not gross to gross. Why? If your income goes down, so do your taxes – so the perceived “gap” may be less than you think. As well, you may not be paying for the Canada Pension Plan anymore, or other payroll deductions like union dues, parking, and so on. Net to net.
  2. You’re likely only going to get a pension payment once per month. If you are used to getting paid monthly, you’ll be fine. It takes some getting used to if you were paid twice a month or every two weeks. Adjust your thinking accordingly.
  3. Your stresses will change, but probably won’t disappear. Instead of worrying about meetings, promotions, career changes, traffic and so on you’ll find you are more focused on family, taking care of the old ones and helping the young ones. No meetings, sure, but still things to worry about.
  4. You have time to learn new things. We’re line dancing, and this guy is golfing more and actually getting better on guitar. The line dancing has led us to meeting new people and we’re going on a trip to Nashville in the fall. So, make sure you are still doing something that allows you to have new social contacts in your life.

We conclude by noting that retirement almost seemed scary when we were working. No more structured workweek with meetings, assignments, annual reviews, and the like. Those things definitely required attention in the past, but now there are new and more interesting things to focus on. So, don’t be afraid of life after work.

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Dec 6: BEST FROM THE BLOGOSPHERE

December 6, 2021

Students should take advantage of retirement saving and its tax advantages: The Varsity

We all look back fondly at our days as students, whether in regular or post-secondary school. At no time does this writer ever remember any friend or classmate talking seriously about the need to save for retirement. There were many other things to worry about, including passing courses and looking for a job.

But an article in the University of Toronto’s The Varsity newspaper says even students should be thinking about life after the jobs they are about to find.

“As a student, investing in a (registered) retirement savings plan early can prove to have long-term benefits like tax-deductible contributions,” the article begins. “This means that the amount you put into your RRSP for the year is deducted from your taxable yearly income. Further, investments are tax-deferred, which means that taxes on the growth of your investments are not paid until you withdraw the funds from your RRSP account,” the article explains.

The article makes the point that while the tax-free savings account (TFSA) allows money to grow without taxation, contributions made to it are not tax-deductible like RRSP contributions. As well – and a key point if you are thinking of the money being like a piggy bank for the future – is that withdrawing money from an RRSP is more difficult. The RRSP piggy bank is much harder to raid than a TFSA, the article explains.

“The idea of saving for retirement while having to pay outstanding debts like credit card statements or mortgages can be overwhelming,” The Varsity notes. “Everyone has a different financial scenario and students must evaluate what works best for them, even if it means only putting small amounts of money aside in their RRSP every month,” the newspaper adds.

The article also looked at the idea of starting retirement savings early.

Citing a recent study, The Varsity reports that folks in the Gen Z cohort start saving at 19; millennials at age 25 and Gen Xers at 30.

And some great news from The Varsity article is that younger people are getting the message about the importance of getting a head start on retirement savings.

“It appears that starting to save at a younger age has been a message that has trickled down across generations, since the oldest members of Gen Z are only 24 years old. Gen X and baby boomers have been found to contribute an average of 14 to 15 per cent of their income into their retirement fund, while Gen Z and millennials invest, on average, 16 per cent of their income in their retirement savings,” The Varsity reports.

Other points made in the article include the idea that as living costs continue to rise, many households “will need to continue working past the age of 65 in order to afford retirement.” Citing recent research from the Healthcare of Ontario Pension Plan, the Varsity notes that 67 per cent of Canadians “think that Canada will be facing a retirement crisis;” that same study found that 77 per cent of workers liked the idea of their employers offering retirement savings plans.

The Varsity article concludes by saying that if you are young, you should be asking and talking about getting an early start on retirement saving.

If your employer does offer a retirement program, be sure to join it and contribute as much as you can. If you don’t, you need a do-it-yourself retirement plan. The Saskatchewan Pension Plan provides exactly what you need to get rolling. You can contribute up to $6,600 per year to SPP, and like an RRSP, SPP contributions are tax-deductible. Check out SPP, celebrating 35 years of operations, today!

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


The CAAT is out of the bag – any employer can now join established “modern DB” plan

July 9, 2020

We often hear how scarce good workplace pensions are, and how many employers, notably those in the private sector, have given up on offering them altogether.

But, according to Derek Dobson, CEO and Plan Manager of the Colleges of Arts and Technology (CAAT) Pension Plan, there is an option for any Canadian employer that doesn’t want to go through the effort and expense of managing a pension plan for their employees. That option is CAAT’s DBplus plan.

Dobson tells Save with SPP that there are three main themes as to why some employers – with or without their own pension plan – might want to look at DBplus.

Running what is called a “single employer” defined benefit (DB) plan means the risk of ensuring there’s enough money invested to cover the promised benefits rests on the shoulders of one employer. In a multi-employer plan, however, many employers are there to shoulder the load – the risk is shared.

As well, he notes, it might be a chance to upgrade pension benefits. “A lot of organizations want to have access to something better for their people… some employers offer nothing, or a group RRSP. Now they can move to a modern DB plan,” Dobson explains. One study by the Healthcare of Ontario Pension Plan (see this prior Save with SPP post) found that most Canadians would take a job with a good pension over one that pays more, Dobson notes.

A final benefit, he says, is the ability that DBplus has to move all employees to a common retirement benefit platform. “In many organizations, you may find that one group of employees has nothing, one has a defined contribution plan, others have a DB plan that is now closed to new entrants… DB plus allows you to put everyone on the same platform,” he says.

Noting that another large pension plan – Ontario’s OPSEU Pension Trust – has launched a similar program for non-profit organizations, Dobson says the idea of leveraging existing pension plans to deliver pensions to those lacking good coverage “is great…the long and the short of it is that there’s a general belief that these larger plans want to put up their hands to help where they can.”

“It’s the right thing to do,” he says.

Why are pensions so important?

Dobson points out some key reasons. “The average person these days will live to age 90, and on average, they retire at age 64 or 65,” he explains. “That’s 25 years in retirement. So having a secure, predictable income, one with inflation protection and survivor pensions, and that is not being delivered for a profit motive – that’s why these plans are so powerful.”

Another great thing about opening up larger plans to new employers is that it addresses the problem of “pension envy,” Dobson says. Instead of pointing out who has a good pension and who doesn’t, now “everyone has access to one, to the same standard.”

Those without a pension have issues to face when they’re older, he warns. “The Canada Pension Plan and Old Age Security systems weren’t designed to be someone’s only source of income,” he explains. “We had a three-pillar system in the past – CPP, OAS, and the third pillar, your workplace pension plan and your private savings,” Dobson says. But a large percentage of Canadians don’t have pensions at work, and a recent study by Dr. Robert Brown found that the median RRSP savings of someone approaching retirement age is just “$2,000 to $3,000,” Dobson says. Yet the same study found Canadians are willing to try and save 10 to 20 per cent of their income for retirement.

Dobson says he is energized by the goal of bringing pensions to more Canadians. “It’s a way of making Canada better,” he concludes.

Here’s a video about how the CAAT pension plan delivers on benefit security.

We thank Derek Dobson for taking the time to speak to Save with SPP.

If you don’t have a workplace pension, or the one you have offers only modest benefits, don’t forget the Saskatchewan Pension Plan. SPP allows you to decide what your savings rate will be, grows those dollars at a very low management rate, and can convert the proceeds to a variety of lifetime pensions when you retire. Check them out today.

Join the Wealthcare Revolution – follow SPP on Facebook!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.