There’s no doubt that Group Registered Retirement Savings Plans (RRSP) provide many benefits for working Canadians. In fact, larger companies frequently include Group RRSPs as part of their overall compensation package to attract employees.
Group RRSPs deposit a portion of what an employee would have otherwise received in their paycheque into a registered account in the employee’s name and then invest that contribution into a fund. That fund is from a predetermined menu put together by the employer, limiting the investment options that the employee can choose from. The process of automatically saving and investing that money is commonly viewed as a good way to combat procrastination, forgetfulness, or just being busy; ultimately, this automated process is generally viewed as a benefit. Although there is a little bit of work to set things up, from the employee’s vantage point, there is little to no work to be done on an ongoing basis, save for remembering to include these contributions in their annual tax returns. But perhaps the greatest benefit of a Group RRSP is employer matching, which is when an employee’s RRSP contribution is matched in part or in whole by their employer. The matched contributions are considered income and can be regarded as a bonus.
However, costs, especially those surrounding matching, can prevent some small- to medium-sized companies from providing RRSP plans to their staff. So how can these companies provide investment solutions to their staff if they don’t have the resources to do so?
Newer companies can begin with a very low contribution rate, with the hope and expectation that the matching will increase as the company grows. Some matching is better than no matching, and the automation of saving and investing in a Group RRSP can be worth it in and of itself.
Additionally, employers should note that their staff can emulate a retirement investing strategy through their own direct investment, where they have more control and access to more long-term investing options.
Here are three ways employers can help their staff, especially if they don’t offer investment benefits to employees.
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Host a financial literacy lunch and learn
A recent Bank of Montreal survey revealed that 49 percent of Gen Z and 39 percent of millennials who primarily hold their savings in cash do so simply because they do not know how to invest. That same survey also revealed, however, that Gen Z and Millennials are Canada’s most engaged generations when it comes to tracking financial goals.
Canada’s future working population has an interest in saving for their future but struggles to find the quality resources to educate themselves on how to do that. Education sessions are a simple way that companies can support their staff that won’t cost a lot of money. Host a Lunch & Learn on financial literacy with your staff. Many financial advisors, or even personal finance social media influencers, have great tips to share – you’ll find the right person for your company!
Think about wellness in terms of finance
Many small to mid-sized companies are offering employee wellness benefits to retain employees, particularly as the job market heats up. Startups in particular are looking into wellness benefits to retain their staff. The question is – how can employers make their employees’ lives less stressful?
Money can be a major contributor to stress, so consider financial wellness offerings, including offering an individualized approach to financial benefits, or bringing in a financial wellness expert for a Lunch & Learn. Also, ask your staff for their thoughts on ideas they may have to offer.
Share other retirement investing solutions
Canadians are busy with their jobs, families, and managing their day to day life, often leaving them no time to think about how they want to invest long term. They need a simple solution that will take the make work out of choosing what to invest in.
If you’re unable to provide your staff with a group RRSP, point them to low-cost, easy to understand solutions in the market. Better yet, share investment options that they can access through their already established bank provider. For instance, staff can invest in Evermore Retirement ETFs through their direct investing accounts, providing them with an accessible, goal-based retirement investment solution that takes the hassle of deciding what to buy, sell, or when to rebalance.
Ultimately, employees care about saving and investing for their future, and businesses that currently are not offering options in-house can still do their part to help.
Myron Genyk is the Co-Founder and CEO of Evermore Capital, a Canadian asset management company that issued Canada’s first and only target date ETF series aimed at retirement, Evermore Retirement ETFs. With over 15 years of Bay Street experience, Myron is now focused on making retirement investing easy and accessible to all Canadians.
Commissions, management fees and expenses all may be associated with Exchange Traded Funds (ETF) investments. Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.