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October 21, 2022

Open-Minded Employers Change Narrative Around Modern Retirement Plans

Open-Minded Employers Change Narrative Around Modern Retirement Plans

By: Paul Webber

Forward-thinking organizations aspire to set up their employees for financial success today and at the end of their working lives.

As a pension consultant and strategic advisor for clients, I acknowledge the existence of systemic biases in current pension plan designs and the impact of these biases on people who don’t look like me.

There is no evidence to suggest that inclusion, equity, and the resulting diversity is bad for business. Incorporating a DEI lens into plan designs and communication strategies will create a more welcoming environment for underrepresented groups and increase employee engagement for all.

I’d like to suggest three actions for employers of all sizes to address potential systemic biases that exist in the Canadian retirement marketplace today:

• CONSIDER Eligibility Rules and Leave Policies

Women more often than men are required to change jobs to balance family responsibilities.

Women also take parental leave more often than men, causing their ability to save to be put on pause. Note that retirement and savings programs often have a three to 12 month waiting period before becoming eligible to participate.

Consider that a mother of two – who has been forced to make two job changes over her career to balance her family – could easily have three or four less years of workplace savings than her male counterpart. The rules and norms that contribute to these disadvantages have been in place for generations.

BREAKING THE BIAS: Employers must consider whether the ROI on these rules can honestly justify the bias they create.

• LISTEN to What Employees are Experiencing

Let’s break free from our own bias by listening. Let’s put our own opinions aside and seek the perspectives of people of all gender and cultural backgrounds.

On the surface, a five per cent matching pension plan would appear to be a great benefit for all employees. Yet try explaining this to a 55-year-old single mom – barely making a living wage – whose financial goal is merely to ensure her kids have a roof over their head and food in their bellies. Would she agree that she should contribute five per cent of her pay to reduce taxes and save for the future?

BREAKING THE BIAS: Most organizations provide a dollar-for-dollar match to a maximum percentage of the employee’s earnings. According to Sun Life’s ‘2021 Designed for Savings’ report, only six per cent of employers match more than 100 per cent. Maybe it’s time to revisit that for lower income employees who might not be in a position to afford the match.

• ASK Employees What They Feel

Speak candidly to your employees about the programs they are being offered.

Focus less on the products that industry professionals are trying to sell you and more on employee needs in order to assess whether the programs are equitable.

BREAKING THE BIAS: The purpose of savings and benefit programs is to offer financial support to cover various potential costs. Ask open-ended questions to determine what people are concerned about financially in the next 12 months, five years, and 10+ years.

Questions To Ask Yourself

• Do you have the right consultant, advisor, broker with the right set of experiences to partner with you as you progress forward?

• Do you have a communication strategy in place to help your employees with the various aspect of their financial quality of life so they can sleep at night?

Paul Webber is a pension and savings plan leader.