Sponsored by The Great-West Life Assurance Company and based on a survey by Benefits Canada/Canadian Institutional Investment Network, the report shows that employers contributed 4.6% of salaries to their defined contribution (DC) pension plans in 2009, up from 4.5% the previous year. They also contributed 4.3% of salaries to their group Registered Retirement Savings Plan (RRSP) in 2009, up from 3.9% a year earlier.
The benchmark report also shows that more employees are maximizing their DC pension plan contributions: 80% of responding employers with DC pension plans said their plan participants maximized their contributions in order to get full employer matching, up from 75% in 2008. For group RRSPs, 82% of plan participants were reported to be maximizing their contributions, up from 75% a year earlier. Among firms with under 100 employees, 91% reported that their employees maximized their contributions so as to optimize matching employer contributions.
"This research clearly illustrates how robust employer-sponsored retirement plans are in Canada," said Bill Kyle, Senior Vice-President, Group Retirement Services at Great-West Life. "The report shows that Canadian employers make significant commitments to group retirement plans, and that employees value this benefit by taking maximum advantage of employer matching programmes.
"The annual survey is an essential tool for monitoring the health of Canadian capital accumulation plans (DC pensions, group RRSPs, and deferred profit sharing plans), which play a growing role in Canada's retirement landscape," Kyle added. "In fact, over 50% of private sector workers now enjoy retirement plans at work, with over 70% of this coverage provided by CAPs."
Other findings in the report
- Overall, employer participation in group RRSPs rose in 2009: 46% of respondents said the company contributed to their group RRSP, up from 32% in 2008.
- Smaller companies were more likely to put money into their group RRSP. Among employers with under 100 employees, 70% make contributions, while 67% of employers with 100 to 199 employees make contributions.
- Respondents reported that employees contributed an average of 4.5% of salary to their DC pension plan in 2009, up from 4.2% in 2008.
The 2009 CAP Benchmark Report is based on data collected in 2009 from 264 organisations. The average DC pension plan surveyed had assets of CAD 93 million, while the group RRSPs surveyed had average assets of CAD 22 million.
Great-West Life has 1.2 million group retirement savings plan member accounts and administers one in three Canadian defined contribution retirement plans.
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Smartphones help plan members save for retirement
Great-West Life’s innovative new online calculator is helping group retirement savings plan members see how even a small increase in contributions to their employer-sponsored plan can lead to a significant increase in their annual retirement income.
"People want access to resources that can help them make decisions about achieving their retirement savings goals," says Michael Campbell, Vice-President, Group Retirement Services Marketing at Great-West Life. "This new calculator not only helps plan members see the difference that a small increase in contributions can make, it also allows them to change their contribution rate quickly and easily."
With easy-to-read graphics, the new calculator shows plan members what they can do to reach their retirement savings goals. For a 25-year-old plan member currently earning CAD 30,000 a year, an additional 1% of salary – i.e. CAD 300 - contributed each year can add up to CAD 1,431 more in annual retirement income.
"We believe we're the first to make this type of tool easily accessible on a smart phone," Campbell said.
He continues: “In many instances, plan members have access to a customized version of the calculator that includes their employer's matching contribution. This new tool is just one example of the support and features we offer to meet the changing needs of group capital accumulation plan members,”
The My 1 per cent Advantage Calculator can be accessed by plan members using their BlackBerry or iPhone smartphone at www.my1percentadvantage.ca
For more information
please visit www.greatwestlife.com