Earlier this year, we shared some upcoming initiatives that the Financial Services Regulatory Authority of Ontario (FSRA) was considering to cut red tape and make it easier for companies to do business in Ontario.
Shortly after that, FSRA removed the requirement for defined contribution (DC) plan sponsors to file audited financial statements and a Statement of Investment Policies and Procedures. Although plan assets and investment line-ups continue to be important elements of managing these plans, anything we can do as an industry to make it easier for plan sponsors to offer these programs is a win. This also frees up more time and resources to focus on their plan members and plan outcomes which is also good news.
So how can plan sponsors support their members and why is this important?
According to the 2021 Financial Stress Index (FP Canada), 38% of Canadians indicated that money was their biggest concern, higher than personal health (26%), work (20%), and relationships (15%)
Additionally, the 2021 National Survey on Canadians’ Preparedness for Retirement (Abacus Data, HOOPP) found that:
- 75% of Canadians are concerned about not having enough money for retirement
- 71% are willing to forgo a higher salary in exchange for a better retirement plan
Clearly, short- and long-term financial well-being is a top concern for today’s workforce. In fact, Canadian employees have weighed in on the benefits of an employer-offered financial wellness program1:
- 89% of workers feel it’s important for employers to offer a financial wellness program
- 74% say these programs help reduce financial stress
- 66% say these programs improve their company loyalty
- 57% say these programs increase their productivity
Taking a proactive approach to employee financial well-being
There are many tactics organizations can take to support the financial well-being of their employees and address both current financial issues and long-term retirement savings goals. Potential solutions include:
- Adopt a retirement savings plan. If you don’t currently offer a retirement and savings plan, consider implementing one with company matching contributions. If your employees are willing to forgo or delay salary increases for a retirement plan, be sure to consider this in your planning process.
- Promote your existing retirement savings plan. If you currently offer a retirement and savings plan, it’s critical to promote it and encourage your members to take full advantage of it. If your plan is a defined contribution pension plan, you may find yourself with additional time and money now that your financial statements no longer need to be audited. In that case, now may be the perfect time to plan more extensive education for your employees to ensure that they’re participating in the pension plan.
- Offer a financial wellness program. A program that promotes financial wellness can be implemented as one pillar of your overall wellness strategy to help reduce financial stress, improve company loyalty, and increase productivity. If you offer an Employee and Family Assistance Program (EFAP), remind your employees about the full range of offerings and services, as most of these programs provide financial literacy and counselling tools and resources. If you don’t offer an EFAP, consider implementing one.
- Educate your employees on financial literacy and retirement readiness. Tools and resources to prepare your employees for retirement, both financially and psychologically, can be tailored to the needs of the various generations represented on your teams.
- Provide one-on-one financial coaching. You may wish to consider offering financial support and coaching available for your employees. The individual needs of your employees may differ based on the diversity of financial well-being and retirement readiness among your staff; often, individual coaching can be more beneficial than general group sessions or resources.
- Prepare your retirement-ready employees. When working with employees who are ready to retire, it’s essential to support them with decumulation strategies and one-on-one support to help them navigate all the financial decisions of retiring.
Show your employees that you care
Financial well-being strategies will not only increase your employees’ financial literacy and reduce their financial stress—they also demonstrate that you care about their futures. With today’s increased focus on attracting and retaining top talent, programs that expand your employee engagement and loyalty are more important than ever.
Contact your Cowan consultant to learn more about strategies that focus on financial well-being and positive retirement savings plan outcomes.
1 Financial Stress Survey (Greenwald & Associates, John Hancock, 2021)