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Understanding workplace savings and benefits programs for your business

By ATB Financial 5 October 2020 6 min read

Attracting and retaining the best employees can be another challenge among many that business owners have to confront day-to-day. But one strategy to make that work smoothly is creating an enticing workplace savings plan that fits with your business’s budget, while also offering flexible benefits your staff will appreciate.

It’s no surprise that group benefits plans and savings programs could sway people from one company to another. A 2018 survey found that more than two-thirds (69 per cent) of Canadians would select a new job with a group savings plan instead of staying at a current job without one.

“By helping alleviate the stress related to financial security, Canadian companies can have a greater chance to attract and retain talented employees, play a positive role in their employee’s lives and create a healthier company culture and a stronger Canadian workforce,” said Randy Cass, founder and chief executive officer of Nest Wealth Management, who conducted the survey.

Financial burdens employees face weigh heavily on Canadian businesses: the Canadian Payroll Association's 2019 National Payroll Week Survey of Employed Canadians reported 43 per cent of workers “are so financially stressed that their performance at work is actually suffering. The Association calculates that financial stress deducts nearly $16 billion a year in lost productivity from the Canadian economy.”

So if you’re new to installing a group savings plan and benefits package for your employees, or if you’re seeking a way to level up what you have in place already, this post’s advice could make your decision-making process a lot less nerve-wracking.


A smart business strategy begins with competition research

First, you should realize the many choices available to you when you begin to consider what you can offer your employees. Workplace savings plans range from unmatched TFSAs that employers simply agree to deduct from an employee's payroll to employer matching programs (when employers match an employee’s contribution to the savings plan up to a certain dollar amount or up to a certain percentage) to full defined benefit pension plans.

It can be overwhelming to pick the right plan for your business, but you can start by researching what your competition is doing, according to Brandon Stutheit, director of group wealth services at ATB. “Recognize what your industry is doing in this space because competitive intelligence can help you when you decide on the best plan for your employees,” he says.

He adds that so many Canadians are living pay cheque to pay cheque that the program you choose can incentivize prospective employees to join (and stay) at your business.


Employer matching savings plan could work for your company

Fixed savings plans are common because they don’t significantly weigh down businesses with added expenses. But as a business, and a brand, do you want to travel down the same road as your competitors or do you want to attract top talent with more financially tempting plans?

When you contribute to your employees’ retirement account, your business could be regarded in a much shinier light than businesses foregoing this idea. After all, this strategy tells your staff that you care about their well-being and that you want them to be financially secure long after they’ve retired from their role.

Ushering in an employer-matching plan could also offer you and your employees tax benefits. Stutheit explains that for the employer, any funds that you match in an employee matching program are considered to be a business expense and are tax deductible.

He adds, “The other interesting thing is that if the employer has it set up as an RRSP then the employees can contribute their share to the program on a pre-tax basis and while the employer portion is a taxable benefit to the employee this is offset by the tax credits they receive for making an RRSP contribution. Individual situations will vary but for the most part these programs allow employers to contribute to their employees’ retirement savings with limited tax consequences.”


Friendly plans with benefits

Another component to incentivize and retain employees is the health benefits package you bring to the financial table.

You have a few options, such as going the route of Health Spending Accounts (HSAs), traditional insured benefits or opting for flexible benefits packages. The advantage of HSAs is that employers can set cash payments for specific covered services, and can help to cover some of the costs of doctor visits, hospital stays or prescriptions, for example.

Traditional insured benefits are typically a step up as they usually cost more than HSA programs and they are one size fits all (same coverage for all employees in certain groups regardless of need). Flex plans give your employees more choice on what they would like, with the idea being that you choose how many credits should be available to your staff to purchase their benefit coverage. They can pick the coverage they need, from a complete package to only the items that are most relevant to their situation.

Stutheit says, “Why would benefits make employees more satisfied, more likely to show up, less likely to leave and more interested in achieving corporate goals? My view is that it’s because financial stress is the most prominent issue employees face and that financial stress is going to impact their job performance.”

He cites a study that found when people face financial scarcity, their IQ actually drops at an average of 12 points.

If you choose a flex benefits plan, don’t rush it. Canadian Business recommends planning on 12 to 18 months lead time between the start of your project and the new flex program effective date.

Education benefits can also be attractive to employees, Stutheit says, which are typically out-of-pocket costs for employers to invest in their employees’ professional development or to obtain degrees like an MBA. “Just be sure that before you implement this program you analyze this plan thoroughly to determine the potential need for it and the costs you might face,” he says.


Try not to downgrade plans midstream, ensure you review periodically

What about if a business owner decides to shift their savings plans and benefits package when, say, their business faces a crisis and needs to save cash quick? Would that frustrate employees in some way?

Stutheit says to be cautious about changing plans midstream. “If I was a business owner I would try very hard to create a plan that I felt we could sustain even in rough times,” he advises. “You can certainly downgrade these plans and keep employee morale high if you communicate it right but it is a very tricky situation and more often than not the perception will be negative. It’s better to be a little bit cautious and upgrade over time as opposed to putting yourself in a position where you have to walk a very fine line in removing some benefits later.”

Finally, Stutheit recommends every business owner take the time to review how employees used their workplace savings plans, including the costs the business incurred with benefits packages. “You want to have a full view of the program and understand who took advantage of what during the year,” he says. “And you should always be researching the competitive landscape to see what’s changed.”

Helping your employees save for the future can do wonders for their loyalty and satisfaction with your business, but it takes some proactive thinking to parse what is best for them and your industry. And that’s a goal worth aiming for no matter what stage you are at as a business.

If you’re looking for a deep dive on everything you need to know around how to grow your business our entrepreneur strategists are available to meet with you and explore where you are with your business, where you want to be, and how to get there!


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