Front Lines: A Matter of Time

Group TFSAs on the Way

The tax-free savings account (TFSA) is expected to be a hit when it comes into effect in 2009, but individual Canadians won’t be alone in taking advantage of the new savings vehicle.

A poll of more than 250 employers, conducted by Hewitt Associates, found that 43% of respondents said they are likely or highly likely to introduce a TFSA to their group benefits plans. Another 45% are unsure but haven’t ruled it out.

The TFSA allows for contributions of up to $5,000 a year, with no tax paid on capital gains or investment income upon withdrawal of the funds. Lauded as a versatile savings vehicle and expected to be popular with a broad number of Canadians, TFSAs will be available through Canadian banks and financial institutions.

So, if average Canadians will have access to TFSAs on their own, why would employers offer them as part of a benefits plan? According to the poll, 40% of employers say they want to add another vehicle for tax-favoured retirement savings, while 36% are interested in providing greater flexibility for employees. Eleven percent believe that adding a TFSA will assist with attracting and retaining employees, while the same percentage think that doing so will help them to maintain a competitive benefits program.

The key question that employers will need to consider before introducing a group TFSA is whether they want to encourage savings for retirement or just general savings, explains Mazen Shakeel, a senior retirement consultant with Hewitt Associates. He says most employers are likely to lean toward retirement savings accounts as opposed to general accounts where employees can freely deposit or withdraw money. “I think you’ll have many companies introducing a TFSA as primarily a retirement vehicle, with some sort of restrictions to discourage the ins and outs on a daily basis.”

Shakeel says the introduction of the TFSA provides a perfect opportunity for employers to review their retirement plans and their overall benefits programs. “If introduced and communicated effectively, a TFSA can provide a real benefit to employees and possibly a competitive advantage for employers.” — Jody White

Employee Health and Unwellness

Mental health is a growing concern for employers, and nearly 80% of them say that mental health issues have increased in importance compared with three to five years ago, according to a survey.

The survey, conducted by Mercer in conjunction with The Canadian Alliance on Mental Illness and Mental Health (CAMIMH), finds that respondents—about 85% of whom are HR representatives—say only 13% of senior executives have a strong awareness of the impact of mental health on the organization.

“The high ranking that mental health has on the HR priorities list, combined with the lack of awareness at the top of the organization, is cause for concern,” says Anne Nicoll, a principal with Mercer. “Executive knowledge and commitment to action are critical in addressing this issue.”

Forty-seven percent of respondents with no or only some senior executive awareness have no plans or don’t know how to improve the awareness of the executive team.

“One of the impediments to senior buy-in is the lack of measurement of the impact of mental health issues needed to make a business case for action,” adds Nicoll. “Only 22% of respondents reported that they measure the impact of mental health issues. Of those that do, the top two measures reported were disability claim statistics and employee assistance program usage, which means that employees who do not access these programs are not being captured at all.”

Two-thirds of the survey respondents also appear to be underestimating the prevalence of mental illness in the workplace. It’s estimated that 35 million workdays are lost every year in Canada due to mental illness.

Also, a recent study by the Public Health Agency of Canada estimated that 13% of the adult population in Canada has either been diagnosed with a mental illness or remains undiagnosed. However, 46% of respondents reported that they have 5% or fewer employees who experience mental illness in a year, and another 22% estimated the prevalence to be between 5% and 10%.

There were 452 HR professionals and business leaders who took part in the Mercer/CAMIMH survey. Participants represented a wide range of industry sectors and sizes, from organizations with fewer than 100 employees to those with more than 5,000 employees in Canada. — Craig Sebastiano

> click here for a PDF version of this article