If the new Tax-Free Savings Account (TFSA) is the highlight of the budget, the question is, What do you do with it? The merits of the account are by now well understood from an individual point of view, as its flexibility allows employees at all income levels to use it in different ways. But if it really is the new registered retirement savings plan, as some are calling it, are group TFSAs the future? And if so, what are the implications for plan sponsors?

“Yes, group TFSAs are on the horizon,” says Kim Duxbury, assistant vice-president, marketing, communications and education, group retirement services, with Sun Life Financial. “It’s just a matter of what the product will look like, what the take-up rates will be, etc.” She says that several Sun Life clients want to offer TFSAs to their employees. “By and large, many plan sponsors expect to roll it out,” she explains. “They just need the details.”

In the meantime, some providers are preparing to hit the ground running. Manulife Financial’s Sharon Seifried, assistant vice-president of marketing, group savings and retirement solutions, says that she’ll be ready to go on day one. “Based on what we know at this time, Manulife’s group savings and retirement solutions plans to launch a group TFSA on Jan. 1, 2009, unless there are major regulatory roadblocks identified,” she says.

Are there any reasons for plan sponsors not to offer group TFSAs? Duxbury says that, just as with any other financial product or savings vehicle, a lot depends on the company. “Companies must look at the overall purpose of the plan,” she says. “If they introduce a TFSA to their employees, what do they expect to happen? Will money simply move from an existing product under their plan to a TFSA? Is their program as tax-effective as it can be?” She adds that companies might consider using TFSAs across their entire benefits programs. “We could see some very interesting options.”

William Robson, president and chief executive officer of the C.D. Howe Institute, believes that TFSAs make sense for sponsored individual plans, and could be attractive as pooled arrangements as well. “Pooled plans are badly underdeveloped in Canada. TFSAs could add an attractive option to the mix,” he says. Robson thinks that policy-makers will have to approach the issue in a constructive spirit, and adds, “Companies that do support TFSAs as sponsors will be pioneers in their fields.”



Grave Matters

If there is life after death, 8,000 Irish citizens may be living it in style. The Department of Social Services and Family Affairs in Ireland is starting a “life certification project,” investigating the recipients of contributory pensions living outside of the country. The department suspects that there are at least 8,000 people receiving payments who have either passed away or who no longer have adult dependents. Fourteen percent of pension recipients live abroad, and their countries don’t automatically contact Irish authorities when they die.

Alive and Well

An Employee Benefit Research Institute report notes that large employers say they aren’t ready to bail out of acting as the backbone of health insurance coverage in the U.S. They’re pushing for changes to alleviate rising costs, but they haven’t settled on one model. And they aren’t convinced that consumer-driven health plans are the solution. Employers are committed to the current system, but they’ll be watching closely to see if any large companies move to cut costs by dropping out as health insurance plan sponsors.

Early Retirement

General Motors (GM) has set up an attrition program for the 74,000 employees represented by the United Auto Workers. GM is offering retirement pension incentives of US$45,000 for production employees or $62,500 for skilled trades. Other incentives include pension payment with full benefits for employees who are at least 50 years old with 10 or more years of service; a pre-retirement program for employees with 26 to 29 years of service; or a cash buyout to workers who voluntarily quit and sever all ties with GM.


A Study in Flexibility

As family and life demands increase, employees are feeling stretched. But employers can help by implementing a little flexibility in the workplace.

Hewitt Associates’ 2008 Best Employers in Canada study—which collects employee surveys every year from about 200 diverse organizations— looked at workplace flexibility in conjunction with its key measure of employee engagement. “Engagement scores were higher among people who indicated more workplace flexibility,” says Neil Crawford, principal with Hewitt.

After offering more flexible workplace options such as part-time work and variable work hours, one Hewitt client, an oil company in Calgary, improved in its employee engagement. “They did a rollout of some of these kinds of programs over the last year, and [it] had a pretty significant impact on their engagement.” But providing these options is only one part of a larger trend, says Crawford. “We’re generally seeing a very broad trend toward flexible rewards.”

The U.K. is much further ahead on flexible rewards, he says, adding that there’s more flexibility in how employees spend their cash compensation within a flex fund, such as the option to purchase discounted grocery coupons. While a total flexible rewards is still a ways off in Canada, for now, programs such as telecommuting will have to suffice. “It’s a very visible, tactile piece of the employment deal that can have a pretty significant profile with people who can take advantage of it.”

But employers should keep in mind that implementing flexibility measures may not benefit everyone. A study from the Rensselaer Polytechnic Institute in Troy, N.Y., suggests that the prevalence of telecommuters in the workplace can have a negative impact on co-workers who remain in the office, in terms of job satisfaction and likelihood of leaving the organization. Why? Non-telecommuters may find the workplace less enjoyable, have weaker emotional connections to co-workers, and feel less obligated to the company in general. So much for employee engagement. — Brooke Smith


Free Money

Contributing to an employer-matched savings program is like winning a mini lottery at work—but not everyone is taking advantage of this jackpot. According to a recent survey by Sun Life Financial, which polled 1,530 working Canadians, nearly 40% of employed Canadians have access to employer-matched savings plans, such as group registered retirement savings plans and defined contribution plans, but only one in five takes advantage of them.

When asked why they don’t participate in these programs, respondents said they didn’t have the desire to do so (21%), didn’t have the money to spare (14%) and preferred to invest on their own (6%). However, a large group of respondents (30%) simply answered, “I don’t know.”

While “I don’t know” leaves a lot of room for interpretation, one very plausible explanation is that people simply don’t know how to participate in these programs. “What this shows is that the industry needs to do a better job of educating Canadians about the benefits of participating in retirement programs offered to them by their employers,” says Dean Connor, president of Sun Life Financial Canada. “Providing more education during the annual enrollment process to flex plans is an ideal time to remind people of their opportunity to participate in the matching programs.”

He also suggests that employers emphasize the benefits on the date of hire and use targeted messaging on employee account statements reminding them of their options. “The typical match is 50% to 100% of the employee’s contribution, and the typical employee contribution is about 4% a pay. So, if you’re not making your contribution of 4% a pay, then you are giving up about 2% [of free money] each pay. That’s equivalent to a week of vacation,” explains Connor.

Respondents who said they prefer to invest on their own may not realize that they’re missing out on more than just increased retirement revenue. Connor says employer-matched savings programs can offer some very distinctive advantages, such as tax deductions, lower fees than retail mutual fund rates and access to a broader set of funds and investment choices, including some investments that are usually only available in the high net-worth or institutional investing market.

But not everyone is oblivious to the increased benefits of these savings options. The study also found that 75% of Canadians age 50 and older always take advantage of employer-matching programs, compared to 71% of 30- to 49-yearolds and 47% of 18- to 29-year-olds. Atlantic Canadians were the most likely to participate (73%), while Quebecers were the least likely to do so (59%). — April Scott-Clarke



Re: Accommodating Eldercare, February 2008

Caregivers go through a metamorphosis, coping with changes in thinking, emotions and behaviours, while on the surface appearing to balance their responsibilities and interacting with the outside world.

First, while males who are primary caregivers may be stigmatized by being perceived as unable to handle their workloads, women are stigmatized by the reinforcement of stereotypical perceptions of themselves that they’ve worked hard to change—in addition to the caregiver role often being looked at as “women’s work.”

While a career needs an employee’s full attention and concentration, for a sole care provider, there is no downtime after work, on weekends or on holidays to refresh, reenergize and ready the body, spirit, mind for the next working day. You’re on 24/7, at least emotionally. By the time you’ve become the care provider—either by choice or by default—whether you’re conscious of it or not, acknowledge it or not, things are only going to go downhill. That’s just the way things are for the majority of aging people.

If you’ve had children, you’ve had the joy and wonder of watching them develop new physical/mental skills and abilities within a prescribed time frame. The expected outcome is that they will become more independent, go off to school for growth and development, and into a productive adulthood.

A very different experience is in store when caring for an aging adult. First, there are no predictable milestones of decline within a prescribed time frame. Symptoms of decline appear—at times, gradually. Unless you’re very observant and educated about the symptoms and ailments of aging, these can become a full-blown crisis in a moment, when you have to act immediately. The “not knowing” can produce stress and take its toll.

Organizations need productive employees, and employees need assistance to manage eldercare so that they can continue to be productive and fulfill their obligations. Both need to make their needs known so that ways of addressing them can be developed. — Denyse Lynch, President, The Lynch Group

For a PDF version of this article, click here.

© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the April 2008 edition of BENEFITS CANADA magazine.