There is an increasing importance of company pension & retirement plans for employees, with many expressing a preference for a strong retirement pension in favour to pay increases. A study from the Healthcare of Ontario Pension Plan reveals that more than half of Canadian workers would choose a pension over a salary increase. Despite this, some employers mistakenly believe that employees prioritize salary hikes. There is a clear disconnect between employer perceptions and employee preferences.
The mental health index survey from Telus Health Canada indicates that 74% of workers believe employers should provide retirement savings options. However, 65% of employees, including pension plans in their benefits packages, express dissatisfaction with their current benefits. There is a decline in access to workplace pensions, with the proportion of paid Canadian workers covered by a registered pension plan decreasing to 38% in 2021.
The rising cost of living, driven by inflation and interest rates, makes it challenging for individuals to save for retirement. There are concerns about a potential retirement income crisis in the future as the aging population lives longer but saves less for retirement.
Providing retirement benefits helps alleviate employees' financial stress, leading to increased productivity and happiness at work. Employers who added or improved retirement benefits reported increased productivity and better employee retention. Pension plans are more cost-effective and inflation-resilient than salary increases.
Recent negotiations with unions, such as those with the Big Three automakers, highlight the growing momentum for improved retirement offerings. More employers should plan to enhance their retirement benefits in response to employee preferences and the potential positive impact on business.