Secure Your Team’s Future with a Well-Designed Retirement Plan

Are your employees worried about their financial future? Offering a tailored retirement plan is more than just an employee benefit—it’s a powerful tool to help them plan for their savings. As an employer, how do you choose the best option and maximize its benefits? Our experts are here to guide you and implement a customized retirement plan that meets the needs of both your business and your team. Together, let’s ensure a more secure future for them!

A Growing Concern: Are Your Employees Ready for Retirement?

Many workers in Canada feel uncertain about their retirement. According to a recent analysis by Hub International, 75% of Canadians report that the rising cost of living is hindering their ability to save for retirement, and they estimate they will need an average of $1.7 million to retire comfortably.

With the increasing cost of living, daily financial priorities often take precedence over long-term savings. The result? Many employees reach retirement age without having saved enough to maintain their current standard of living.

As employers, we have the opportunity to take action by offering accessible and advantageous retirement savings solutions for our employees. Read on to learn how!

Why Is Retirement Saving a Challenge for Many Workers?

Despite the intention to save, several factors can hinder retirement planning:

• Inflation and cost of living: Rising expenses leave little room for savings.
• Debt: Mortgages, student loans, credit cards—many workers prioritize debt repayment over retirement contributions.
• Lack of financial planning knowledge: Many employees don’t know how much they’ll need or how to structure their savings effectively.
• The belief that retirement is “far away”: The earlier you start, the easier it is to build a solid nest egg, but many put off thinking about it.

Understanding Group Retirement Plans

A group retirement plan is a powerful tool to help secure your employees’ financial future. Tax-sheltered contributions allow them to accumulate substantial savings over their years of service.

Here’s an example: With a 5% contribution rate from both the employee and the employer, an employee earning $60,000 can save over $6,000 per year for retirement. This also comes with tax advantages. Assuming a 5% annual return, after 20 years, this investment grows significantly, creating a solid financial cushion for retirement.

Participation in a retirement plan can also be adjusted to fit each employee’s needs, including financial planning considerations for their spouse.

What Are the Different Types of Retirement Plans?

Every company is unique, and there are various types of plans suited to different needs:

• Group RRSP (Registered Retirement Savings Plan): A simple, flexible option where the employer can contribute.
• Deferred Profit Sharing Plan (DPSP): Ideal for businesses looking to share profits with employees in the form of retirement savings.
• Defined Benefit Plan: Provides a guaranteed pension but requires more rigorous management. This type of plan is relatively rare.
• Defined Contribution Plan: More predictable for employers and allows employees to accumulate savings based on their contributions.

Regardless of the plan chosen, it’s essential that it aligns with employees’ realities. A flexible solution with adjustable contribution options is always more engaging.

Encouraging Employee Participation: Best Practices

Setting up a retirement plan is great. Ensuring your employees actively participate is even better! Here are a few effective strategies:

• Automate contributions: Payroll deductions make saving effortless and routine.
• Offer an attractive employer match: A matching contribution provides a strong incentive to participate.
• Communicate regularly: Educate employees on the benefits of the plan through informational meetings and clear resources.
• Provide financial support: Offer tools and personalized guidance to help employees plan their retirement effectively—including support for their spouse’s planning.

A Win-Win Commitment

Investing in a group retirement plan means investing in your employees’ well-being and financial security. Whether securing their own future or providing financial stability for their spouse, employees benefit from a strong, tailored program. Additionally, their years of service with your company become even more valuable with increased retirement savings.

Are you looking to explore group retirement plan options for your business? Let’s talk! Our employee benefits experts can guide you toward the best solution for your company and your employees. Contact us to discuss your options!

Frequently Asked Questions

How much money should I plan for retirement?

The amount varies based on your lifestyle and income sources (savings, pensions, benefits). Generally, it’s recommended to aim for 50% to 70% of your current annual income to maintain your standard of living in retirement.

What is the QPP?

The Quebec Pension Plan (QPP) is a public program that provides retirement benefits to Quebec workers who have contributed during their careers. You can learn more about it here.

At what age can you start receiving QPP benefits?

You can start receiving your pension at 60 years old, but the amount will be reduced if taken before 65. On the other hand, if you wait until 70, your pension amount will increase.

What is the difference between retirement insurance and a pension?

Retirement insurance is a financial product that guarantees income after retirement (such as an annuity), while a pension typically refers to income from a public or private retirement plan.