As a majority (84 per cent) of Canadian employers say they’re concerned about an emerging retirement income crisis, they also agree that, without access to employer-sponsored pension plans, workers will become a burden on the taxpayer (82 per cent) and the economy will suffer (79 per cent), according to a new survey by the Healthcare of Ontario Pension Plan.
The survey, which polled more than 750 employers, found more than three-quarters (79 per cent) agreed they have a responsibility to offer a pension plan that provides workers with adequate retirement income.
Nearly all (90 per cent) employers said it’s important to offer benefits that will reduce employee stress and a majority (82 per cent) cited a retirement plan as a cost-effective way to do that. Respondents said inflation (86 per cent) and rising interest rates (82 per cent) were the top factors contributing to employees’ financial stress.
Employers that offer a retirement plan ranked retention (64 per cent) and recruitment (59 per cent) as the top reasons for doing so. And employers were increasingly more likely to enhance their retirement plans (34 per cent, up from 29 per cent in 2022) than increase pay (66 per cent, down from 71 per cent) to attract talent in a competitive labour market.
Among employers that added or improved retirement benefits in the last year, more than half (58 per cent) said employee productivity has increased, compared to just 34 per cent of employers that don’t offer a retirement plan.
Roughly a quarter (23 per cent) of employers said they plan to introduce or enhance retirement offerings within the next two years, up from 17 per cent last year. Among employers that don’t offer a retirement plan, more than half (56 per cent) cited cost as the No. 1 reason, followed by limited resources (39 per cent) and a preference for offering higher salaries or other bonuses (30 per cent).
The survey also found employers that don’t offer retirement benefits may not be fully aware of their employees’ views on pensions. While 77 per cent of employers believe employees would choose a higher salary over a pension, a previous survey by the HOOPP found 61 per cent of workers would prefer a pension over a pay hike.
“It’s encouraging to see momentum continue to build for retirement benefits,” said Ivana Zanardo, head of plan services at the HOOPP, in a press release. “The hope is that dialogue between businesses, government, the retirement industry and workers will help employers overcome obstacles to offering retirement benefits. Greater access to retirement benefits could help give employees long-term stability in an ever-changing economy, while helping employers experience the well-documented improvements to recruitment, retention and productivity that come with them.”