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Two East coast companies are among the early adopters of a retirement savings platform for employers in the not-for-profit sector.

Prince Edward Island Family Violence Prevention Services Inc. and Newfoundland-based Thrive previously offered their employees group registered retirement savings plans. Danya O’Malley, executive director of the PEI Family Violence Prevention Services, says lower fees was one of the key advantages of the change.

“If you compound that [fee] over the life of your RRSP, it’s easily tens of thousands of dollars’ difference. That’s terrific because we’re dealing with people that rarely make their full RRSP contributions and it keeps more money in people’s pockets. When they see it compound, it’s very compelling.”

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Angela Crockwell, executive director of Thrive, says the plan is helping employees better understand the path to retirement by educating them on their respective savings requirements. “In the non-profit charitable world, retirement is a big consideration and I feel that we really need to make sure we’re doing the best we can for people who work in this sector. We should be doing what we reasonably can so that people at the end of their career can be somewhat taken care of.”

Common Wealth Retirement’s Common Good plan is a portable savings program composed of a group RRSP, a tax-free savings account and registered retirement income fund. All full- and part-time employees of a participating not-for-profit employer are eligible to join and employers aren’t required to sign up a minimum number of employees to offer the plan.

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“In our sector, there’s lots of smaller employers and a lot of employees who work on missions they believe in,” says Rahima Mamdani, chief people officer at the YMCA of Greater Toronto and a member of the plan’s steering committee. “In many ways, they sacrifice their own compensation both in terms of salary and their long-term savings as well.”

The plan officially launched in May and is currently offered by about 40 employers that match employee contributions, says Alex Mazer, co-founder of Common Wealth. “Many plan sponsors have felt they can’t get good value for money when they’re looking for retirement plans or they find it overwhelming to make all the choices associated with plans. It gives the plan sponsors reassurance that the sector’s needs have been taken into account. . . . When you leave one employer, your fees aren’t going to double or triple when it rolls over into an individual account. It’s important because people change jobs and precarity of work is a common feature in this sector.”

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By incorporating a TFSA, the plan also helps members avoid any clawback on their guaranteed income supplement in the event of withdrawal, says Jonathan Weisstub, co-founder of Common Wealth. “The intention of the TFSA was to help with this GIS clawback issue. A third of Canadians can lose up to 50 per cent of their GIS benefit when they withdraw from an RRSP. They don’t have that problem if they use a TFSA.”