Offering an employee pension plan is a key components to any retention strategy. Whether you offer it to all employees or just executives, thinking that retirement funding is the sole responsibility of the employee is a short-sighted strategy. In the long-term, not having a comprehensive employee retirement package can result in higher turnover rates or employees working longer than they should. Older employees will increase the amount of claims made against your benefits package, which will result in higher premiums.
Most people in the workforce need to see a light at the end of the tunnel. The “light,” so to speak, is their ability to retire comfortably at an age they will still be able to enjoy whatever makes them happy. By providing your employees with an end-game strategy, you will find your workers to be much happier and productive, rather than employees who feel trapped or are just going through the motions.
Here are some common employee pension plan mistakes made by business owners in Canada:
Not having performance based company contributions
Some companies will implement a pension plan that relies on 100% employee contributions. Which is great for reducing your costs on the plan, however a lot of these plans go unused despite all of the time involved and the set-up costs.
Having a performance based company contribution to the plan is the best method of enticing employees. Tying compensation to performance is the best method of motivating your employees and ensuring everyone is focused on a single goal.
Not having a cost recovery strategy
If you are planning on implementing an employee pension plan that matches employee contributions or offers company contributions based on performance, you will need a cost recovery program. There are funding vehicles available to recover these costs with little impact on your profit and loss statements.
Failing to educate your employees
There is no point in having a group retirement plan that no one uses, or no one cares about. Education and communication is key to the success of any group pension plan.
Probably the biggest mistake employers make is not having an employee pension plan as part of their overall group benefits package. Ensuring your employees are financially stable before and after retirement is a sound strategy for attracting top talent in your industry.
For more details on employee pension plans and for a comprehensive review of your benefits package, please contact the experts at DENT Benefits.
The information in this material is derived from various sources. Material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please contact us for benefit, pension and insurance advice based on your corporate or personal circumstances.