3 Ways to Make Retirement Benefits Work for Your Team

Many North American workers are feeling overwhelmed and stressed about retirement, with some saying they won’t be ready to retire and others admitting they haven’t saved anything in the past year. Supporting employees with their retirement planning can help ease their worries and improve your organization’s success and employee retention.

Here are three ways to design retirement benefits that can help address financial stress and promote financial literacy:

1. Implement Matching Contributions

One of the most effective ways to encourage employees to save for retirement is by offering matching contributions. A report on U.S. employees saving into a 401(k) found that nearly half of those surveyed started saving because their company offered matching contributions.

Benefits of Matching Contributions:

• Encourages Savings: By offering a match, you can boost the amount employees save for retirement and increase their retirement savings rate.

• Builds a Culture of Wellness: For small and medium-sized businesses, matching contributions can help lead to higher levels of employee engagement, satisfaction and retention – a win-win for employers and employees. Employees are more likely to stay with a company that actively supports their long-term financial goals.

2. Offer Financial Literacy Resources

Studies show that investing in financial literacy programs can result in a 3-to-1 return on their investment. Offering financial education can also decrease employee turnover. About 80 per cent of Millennials and Gen-Xers would consider changing employers for one that prioritizes financial wellness.

Ways to Provide Financial Education:

• Workshops: Organize sessions led by financial advisors to cover topics such as budgeting, investing and retirement planning.

• Counselling: Offer personalized sessions with financial experts to give employees the opportunity to get advice about their specific concerns.

• Online Resources: Provide access to digital tools and resources. This could include online courses and webinars, or financial counselling could be offered as part of a comprehensive or expanded Employee Assistance Program (EAP).

• Incentivize Participation: Make financial literacy training part of onboarding for new hires and make it a priority for workers with a designated time/place for it. Consider offering gift cards, cash, or merit-based rewards for participating in the training. 

Benefits of Financial Education:

• Improves Financial Literacy: Employees gain knowledge that helps them make informed financial decisions, reduce their stress and improve their financial security.

• Saves Money: Investing in financial education can reduce overall financial stress and potentially lower the costs associated with absenteeism and health issues related to financial stress.

3. Be Flexible with Retirement Planning Options

Offering a range of retirement plans can accommodate the different financial situations, preferences and life stages of your employees. This variety helps them feel better supported in their retirement planning and makes sure everyone can find a plan that suits their needs.

Flexible Retirement Planning Options:

• Group RRSPs: Provide employees with access to a group Registered Retirement Savings Plan (RRSP), which can offer tax advantages and easier management of savings.

• Defined Contribution Pension Plans: Offer defined contribution plans where both the employee and employer contribute to the employee’s retirement fund. This option can be customized to individual contribution levels and investment preferences.

• Personalized Benefits: Consider additional benefits that can support employees’ broader needs, such as flexible work schedules. This can indirectly support someone’s ability to save for retirement by addressing any other financial pressures.

Benefits of Flexible Planning Options:

• Meets Diverse Needs: Employees have different financial situations and goals. A range of retirement savings options allows them to choose the plan that best fits their needs.

• Encourages Participation: Flexible options can increase participation rates in retirement plans, as employees are more likely to engage with a plan that aligns with their personal financial circumstances.

Stress-Free Planning

Designing retirement benefits that address financial stress and promote financial literacy is key to creating a supportive and productive work environment. Contact us today so we can work together to create solutions that work best for you and your organization.

Suggested Reading

How Employer Matching Can Improve Retirement Readiness

Bridging the Retirement Readiness Gap with Pension Plans

Improving Employee Financial Wellness

Additional Resources

How RRSP Matching Works in Canada

Workplace: Request a financial literacy series (CPA)

Financial literacy in Canada (Government of Canada)