Although many of Canada’s small businesses feel responsible for their employees, few of them provide health and retirement benefits, according to the 2013 Manulife Financial Small Business Research Report.
When it comes to health benefits plans, only 47% of respondents currently offer some type of plan. Of these, 44% offer employee health benefits, 20% offer flex health and benefit plans, and 8% offer healthcare spending accounts.
The survey shows that 41% of owners and senior executives who currently provide a health benefits plan considered offering the plan in their startup phase—yet, only 18% actually implemented it. The reason could be that owners and senior executives, who previously worked at a larger company, did not fully realize the financial commitment of a benefits plan, despite being aware of how it helps attract and retain employees, according to the report.
The study notes that benefits are an important attraction and retention tool for startups because they give the impression of greater stability—and investors tend to consider more favourably startups that have already considered this option.
When it comes to retirement benefits, even fewer companies are involved. Only 19% of small businesses surveyed this year reported that they have a retirement plan and they implemented it in their first year of operation.
Of those currently in the startup phase, only 13% have any type of retirement plan. However, they are the most likely to offer a deferred profit-sharing plan (12%).
The survey findings show that almost one-third of startups consider a retirement plan. Of the owners and senior managers who currently provide a retirement plan, 30% considered offering one in the startup phase and 21% actually did. For those who do open a plan, external competitive pressure is usually the motivator, according to the study.
Only 26% of small businesses currently without a retirement plan view such a plan as a valuable talent attraction tool. Still, two-thirds of those who don’t offer a pension plan feel an obligation to take care of their employees, and more than half agree that the financial security of workers who retire from their company is a reflection on them and their business.
Only 37% of companies that have a health benefits plan also offer a retirement savings plan.
The survey polled 1,004 Canadian small business owners and senior managers. The research was conducted by the Rogers Connect Market Research group of Rogers Publishing Ltd. (the owner of Benefits Canada) on behalf of Manulife Financial.
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