In response to the growing issue of employees entering the workforce saddled with significant student debt, Great-West Life Assurance Co. is piloting a program to empower workers to save for retirement while paying down their student loans.
Those employees eligible to take part in the program will receive employer-matched contributions, based on the company’s existing formula, to their group retirement and savings plan as they pay down federal and provincial government student loans. According to a news release from Great-West Life, the strategy will help younger employees make a start on retirement savings while focusing on eliminating debt. The company is touting the program as the first of its kind on Canada. It will launch in early 2018 and will include select employers, with a plan to roll it out nationally after feedback and consultation.
“This program is the result of our ongoing discussions with Canadians about their financial realities,” says Jeff Macoun, executive vice-president, group customer, at Great-West Life. “The approach is simple and responds to the need for increased plan flexibility. More importantly, it makes saving achievable and relevant for those managing student debt loan repayments.”
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Upon entering the workforce, the average Canadian has $27,000 in student debt, which usually takes around 10 years to pay off, according to a 2015 report by the Canadian University Survey Consortium. That burden, the Great-West Life release noted, can prevent younger employees from saving in order to reach financial milestones like buying a first home, starting a family and retirement.
This trend of addressing employee financial health has been on the rise, according to a Willis Towers Watson 2015/16 study that found that over the past decade, employers have been considering the issue more seriously as part of their efforts to boost productivity. ”In response to this issue, employers are beginning to offer a more comprehensive suite of programs that support the financial well-being of employees and their families,” the study noted.
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