Report outlines how plan design is the key to boosting employee contributions
If you’re looking to ensure your employees leave their jobs at retirement with a worthwhile level of savings behind them, then a new report has shed some light on the approaches you can take.
The Capital Accumulation Plan Benchmark Report, sponsored by Great-West Life, outlines how better strategic design of retirement plans and increasing contribution rates can greatly assist employees’ retirement savings.
“Sponsors can use plan design to increase member contributions, while still managing plan costs,” explained Jeff Aarssen, Senior Vice-President, Group Retirement Services, Wealth Management for Great-West Life.
“For example, instead of matching employee contributions dollar for dollar, consider matching at 50 cents on the dollar to a higher percentage of employee earnings. Because people tend to contribute up to the maximum employer match, this plan design option can help increase their total savings.”
According to the report, members contribute an average of 4.3 per cent of their salary in defined contribution plans, while sponsors contributed 4.9 per cent. Meanwhile, group RRSPs has lower contribution rates at 4.3 per cent for members and just 4.4 per cent for sponsors.
In addition, the report found that 75 per cent of defined contribution plans and 18 per cent of group RRSPs are mandatory. Among voluntary defined contribution plans, there is a 68 per cent participation rate; while voluntary group RRSPs had a 53 per cent participation rate.
The report, in its eleventh year, summarizes the results of updated plan sponsor profiles in the Canadian Institutional Investment Network (CIIN), in addition to an online survey fielded by Rogers Connect Market Research Group.
The Capital Accumulation Plan Benchmark Report, sponsored by Great-West Life, outlines how better strategic design of retirement plans and increasing contribution rates can greatly assist employees’ retirement savings.
“Sponsors can use plan design to increase member contributions, while still managing plan costs,” explained Jeff Aarssen, Senior Vice-President, Group Retirement Services, Wealth Management for Great-West Life.
“For example, instead of matching employee contributions dollar for dollar, consider matching at 50 cents on the dollar to a higher percentage of employee earnings. Because people tend to contribute up to the maximum employer match, this plan design option can help increase their total savings.”
According to the report, members contribute an average of 4.3 per cent of their salary in defined contribution plans, while sponsors contributed 4.9 per cent. Meanwhile, group RRSPs has lower contribution rates at 4.3 per cent for members and just 4.4 per cent for sponsors.
In addition, the report found that 75 per cent of defined contribution plans and 18 per cent of group RRSPs are mandatory. Among voluntary defined contribution plans, there is a 68 per cent participation rate; while voluntary group RRSPs had a 53 per cent participation rate.
The report, in its eleventh year, summarizes the results of updated plan sponsor profiles in the Canadian Institutional Investment Network (CIIN), in addition to an online survey fielded by Rogers Connect Market Research Group.
