What would you trade for a good pension?

By Sheryl Smolkin

A recent survey of Canadians revealed that whether or not they currently have a workplace pension plan, the majority would gladly trade off other benefits for any retirement savings plan or a better pension plan at work.

These data were collected by the Conference Board of Canada in a June 2014 comprehensive study into the experiences and perspectives of employers and individual Canadians. Conducted with the support of Aon Hewitt and the National Association of Federal Retirees, the study focused on a variety of issues related to workplace and public retirement savings/pension plans and retirement readiness.

Both employers and individual Canadians across the country were polled. The survey of individuals was completed by a panel of 1,656 Canadians aged 18 and over weighted by gender, region and age.

Who have retirement savings/pension plans?

About 57% of the employed survey respondents indicated they have some form of retirement savings/pension plan such as a Group RRSP, a defined benefit plan or a defined contribution plan at work. Thirty-nine percent said they don’t have a workplace plan and a little over four percent of the total number of respondents “did not know” whether they had one or not.

Respondents in the not-for-profit and private sectors were less likely to report having any form of workplace retirement savings or pension plan, while those working in government were most likely to report having plans. Size of organization and union status were also important predictors of whether or not respondents had a workplace retirement/savings/pension plan.

Indeed, unionized workers were over 1.5 times more likely than those not in a unionized position to have workplace plans. And, more employees of large companies with a staff of over 5,000 reported having a retirement savings plan or a pension plan.

Employees with retirement savings/pension plans 

Who would trade benefits for enhanced pensions?
Forty-three percent of men versus only 28% of women said they would likely trade some aspects of their total rewards for a greater employer contribution to their plan. Also of note, women were roughly three times more likely than men to say they “did not know” whether they would trade or not.

Over 40% of those aged 35–44 and 45–54 said they would likely trade some aspects of their total reward package — while only about 30% of those 65 years of age and over said the same thing. Those 25–34 are about equally divided on this question.

As household income rises, so too does the likelihood that Canadians would consider trading some aspects of their total rewards package for a greater employer contribution to their plans.

Private sector employees are more likely than those in other sectors to indicate that they would trade some aspects of their benefits/rewards for a greater contribution into their plan by their employers. That said, it is of interest that over 30% of those in the government sector would also make a trade for a greater retirement savings contribution .

What benefits would they trade?
Employed survey respondents were asked if given the option, how likely they would be to trade parts of their total rewards package (pay, training, benefits, etc.) to receive greater retirement savings plan/pension plan contributions at work.

A significant minority (37%) indicate it is likely they would make a change. Slightly fewer (33%) say it is unlikely. The remainder are on the fence (i.e., they answered that they are neither likely nor unlikely).

Among those who reported that they would make a trade, or who answered in the “neither” category, anywhere from one-third to one-half would trade a specific item for a greater contribution to their retirement plans.

“Training/learning and development opportunities” was the item most likely to be given up. Nearly 56% indicated that they would make this trade-off. Salary increases were least likely to be considered for a trade.

Table 1: Likelihood of trading specific workplace benefits/rewards for greater employer retirement plan contributions

Likely
Training/learning and development opportunities 55%
Incentive pay (bonuses etc.) 48%
Vacation days 23%
Certain health benefits 38%
Salary increases 35%

Totals may not add up to 100% due to rounding. SOURCE: THE CONFERENCE BOARD OF CANADA

Employed Canadians without a retirement savings plan

How many are interested in participating in a workplace retirement savings/pension plan? 
Almost 7 in 10 employed respondents currently without a retirement savings/pension plan would be interested in participating in such a plan if it were offered. Only a small proportion of respondents (16%) were not interested in participating. The remainder (16%) noted they don’t know whether or not they’d participate if they were offered the opportunity.

With 109 mentions, DB plans topped the list of desired plans. TFSAs were a close second and DC plans came in third.

Who would trade benefits for pensions?
Almost 4 in 10 survey respondents without a retirement savings/pension plan indicate they would be willing to trade parts of their total rewards package to receive any form of retirement savings/pension plan from their workplace. One-quarter said they would be unlikely to do so, and the remainder (36%) are sitting on the fence — i.e., they indicate that they would be neither likely nor unlikely to make a trade.

Of interest, this subset of survey respondents shares similar preferences as those who currently have a plan and would trade for an increased contribution to their plans (see Table 1 above). Further, the proportion of each group indicating that they would be likely to make a trade on each of the items listed is almost the same.

For those currently without a plan the list of potential trades and the % stating that they’d be likely to trade the benefit/reward is as follows:

Table 2: Likelihood of employees trading specific workplace benefits/rewards for participation in a retirement savings/pension plan

Likely
Training/learning and development opportunities 56%
Incentive pay (bonuses etc.) 47%
Vacation days 42%
Certain health benefits 38%
Salary increases 31%

Totals may not add up to 100% due to rounding SOURCE: THE CONFERENCE BOARD OF CANADA

What this means

One facet of the current study explored the role of retirement savings/pension plans in attracting and retaining employees. Without fail, survey respondents said the top three items that attracted them to their current employer/workplace and those that keep them there are:

  • The work environment.
  • The type of work done.
  • Work-life balance.

While 65% of those currently employed cite the organization’s retirement savings/pension plan as being important or very important to their attraction, it only ranked 9th out of 12 potential items.

However, these plans moved up in importance as a tool for retention. In fact, 69% of respondents rate retirement savings/pension plans as important/very important—and with this increase, the relative ranking of these plans  moved from 9th place as an attractor to 6th place out of 12 as a means to retain staff.

This suggests that while employees may not be as concerned about the nature of retirement savings/pension plans or even if one is available when they are first hired, it’s one of the factors they consider later on when a recruiter or another company come knocking.

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