© Copyright 2006 Rogers Publishing Ltd. The following article first appeared in the October 2005 edition of BENEFITS CANADA magazine.
Making the connection
Sometimes you don’t have to be a huge plan sponsor to experience the issues they face. Just ask the Community Futures Development Corporations.
By Sonya Felix

It’s not always feasible for tiny companies to offer much in the way of pension or benefits coverage. But 10 employers belonging to Saskatchewan’s Community Futures Development Corporations(CFDC)found a way to provide group drug, dental and extended health coverage, as well as a defined contribution(DC)pension plan, to their employees.

No formal connection exists between the 10 individual nonprofit corporations scattered all over rural Saskatchewan, other than membership in CFDC, which is a national program set up to promote economic diversification across the country. The companies work independently to provide community-based economic development assistance and each employs between three to six people. The group pension and benefits plan covers an average of 40 people, with benefits available since 1987 and a DC pension plan since 1994.

“Most of the employees consider it very unusual for their employers to offer such an extensive pension and benefits plan,” says Elroy Trithardt, general manager of the East Central Development Corporation based in Broadview, Sask. and the administrator for Saskatchewan’s CFDC DC pension plan. “Our plan is quite unique.”

But, while it may be unique in some ways, Saskatchewan’s CFDC employer-sponsored plan is struggling with issues similar to those faced by the biggest employers in Canada. Its principal challenge is how to reduce benefit costs and how to ensure enough flexibility and investment education to meet members’ needs.

“[Some] of our challenges these days [are] higher drug costs and rising premiums,” says Trithardt, adding that although employers have so far been picking up the higher costs, there is now talk about possible caps on benefits and higher deductibles. “It’s all we can do to reduce costs since premiums are beyond our control.”

After short-term employees were blamed for a spike in the plan’s claims to premium ratios, the decision was made across the group to restrict benefits coverage to long-term employees only. However, Trithardt says the change could have a negative impact on recruitment down the road since benefits have always been a big attraction.

Creating a pension plan for 10 different employers that would still offer members control over their investments was another challenge, but the group managed to set up a DC plan where all employees are vested immediately after probation. And, although about 80% are in a default lifecycle- style fund, there is opportunity for members to do their own investing, as well.

With members spread out all over, face-to-face communication isn’t easy, admits Trithardt. The managers meet quarterly to discuss the pension and benefits plans and they try to have someone talk to all employees, especially about their pensions, at least once a year.

“There are definitely challenges to having a group plan for several small employers,” says Trithardt. “But I think everyone realizes that compared to many people, we are very fortunate. Both employers and employees are willing to compromise so they can continue to enjoy benefits.”

Sonya Felix is a freelance writer living in St. Catharine’s, Ont. sfelix@look.ca