HOOPP's 2021 Canadian Employer Pension Survey

Today, HOOPP put out a press release stating employers offering retirement benefits report greater productivity during COVID, cite reduced employee stress:

Employers that offer retirement savings benefits report higher levels of employee productivity over the past year and have greater optimism for the future, according to a survey of 845 Canadian employers by HOOPP and Maru/Matchbox. 

In addition, employers that offer retirement savings benefits believe it is very important to recruitment, retention and helping employees manage stress. 

“The survey found that a majority of employers see a connection between reducing employees’ financial stress and productivity,” said Steven McCormick, SVP, Plan Operations, HOOPP.  “And a majority also agree that it’s important to offer retirement benefits to reduce stress.” 

He added: “Employers value the various benefits that they offer, but there appears to be a positive association between offering retirement benefits and improved productivity.”
Specific findings included:

• 73% of employers agree that employees feeling financial stress are less productive. 76% agree it is important to offer benefits that will reduce employees’ financial stress.
• The vast majority of employers who offer retirement benefits say they are very or extremely important to recruitment (83%), retention (86%) and the stress management of employees (85%).
• Among companies offering any sort of retirement benefits, 44% say employee productivity has been better than normal over the past year.  This was significantly better than among companies not offering retirement benefits, of whom 29% say productivity improved. 
  • The more robust the retirement savings program, the more likely employers were to report improved productivity. Of those offering the most robust type of plan – a defined benefit pension – a net 38% reported higher productivity. (The net figure is based on the number of employers who reported higher productivity, 51%, minus those who reported reduced productivity, 13%.)
  • For those offering defined contribution plans, a net +31% (47% - 16%) reported higher productivity. For those offering group RRSPs, the net figure was +21% (36% - 15%). And for those not offering any retirement benefit, the net figure was +7% (29% - 22%).

These findings from Canadian employers mirror findings from another recent study, in which 2,500 Canadians were asked about the same issues. That third annual Canadian Retirement Survey from HOOPP and Abacus Data, released on June 17, found working Canadians share very similar views:

• Two-thirds of employees with pensions said pensions are important for keeping them at their current job (71%), making a new job seem attractive (73%), reducing stress at work (71%) and keeping [them] focused and productive (69%). 
• Those who don’t have pensions also see the value in them – among all workers (not just those with pensions), the vast majority (79%) say pensions are important to making a job seem attractive.

The employer study from Maru/Matchbox also found 66% of all employers expect revenue growth in 2021 over 2020, and 47% expect to increase their employee base in the year ahead. Eight in 10 (85%) said they are optimistic they will be successful beyond 2021.

“Taken together, these two separate studies paint a clear picture on how valuable retirement savings benefits are for both Canadian employers and employees,” said McCormick. “While the pandemic has been difficult for many Canadian employers, those who have been able to weather the storm are optimistic about the post-COVID future and half plan to hire. In this context, where employers will find themselves competing for talent, it is notable how important retirement savings benefits are for both attracting and retaining staff as well as increasing productivity.”

The studies also found consensus on the future of retirement in Canada, and it is not an optimistic view. The Abacus survey found 67% of Canadians believe there is an emerging retirement crisis and, in the recent study, 70% of employers said the same.  

Further, both sides agree that employers play an important role. More than three-in-four Canadians (77%) say that employers have a responsibility to offer a pension plan so that employees can have adequate retirement income, and 56% of employers say it is their responsibility to help set employees up for success in retirement.

Employers also see value in portability, which allows workers to transfer their retirement savings from their current workplace retirement plan to a new employer. Most employers (58%) say portability of retirement benefits is at least very important, while just 4% prefer non-portability. And 70% believe that governments should incent the creation of scalable and portable retirement benefits for employees.

Today’s release is the second of three retirement research projects from HOOPP this year. The third, slated for November, will make the employer case for offering workplace retirement savings, including considerations for how all stakeholders, including employers and government, can make it easier for Canadians to save for retirement.

“HOOPP conducts this research because we believe it is important that our members and wider stakeholders understand the value of a good pension as well as the overall state of retirement security in Canada,” said McCormick. “Everyone benefits – employees, employers, governments and the economy as a whole – when Canadians have retirement security.”

The 2021 Canadian Employer Pension Survey was conducted in May 2021 online with 1,094 business owners and business decision makers, 845 of whom are employers. The margin of error for a comparable probability-based random sample of the same size is +/- 1.96%, 19 times out of 20. See more detailed results here.
 
The 2021 Canadian Retirement Survey by Abacus Data was conducted between April 19 and 27, 2021. The margin of error is + / - 1.96, 19 times out of 20. See more detailed results here.

About The Healthcare of Ontario Pension Plan

HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 610 participating employers. Its membership includes nurses, medical technicians, food services staff, housekeeping staff and many others who provide valued healthcare services. In total, HOOPP has more than 400,000 active, deferred and retired members.

HOOPP operates as a private independent trust, and is governed by a Board of Trustees with a sole fiduciary duty to deliver the pension promise. The Board is jointly governed by the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses’ Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU) and the Service Employees International Union (SEIU). This governance model provides representation from both management and workers in support of the long-term interests of the Plan.

About Maru/Matchbox

Maru is a world leading CX and Insights Software & Advisory Services company. Maru was founded to disrupt the data and insight delivery industry with a combination of Software & Advisory Services delivering data in real-time via a unique service model. Maru helps its clients make informed decisions in near real-time by combining proprietorial software, deep industry experience and access to the best minds in research. Maru’s flexible service model means our clients can choose to self-serve our Software directly to create, launch and analyze projects; or choose to utilize our Software with knowledgeable support from insights experts. Maru successfully delivers major national and international CX and CEM programs for Enterprise organizations.

About Abacus Data

Abacus Data is an innovative, fast-growing public opinion and marketing research consultancy. We use the latest technology, sound science, and deep experience to generate top-flight research-based advice to our clients. We offer global research capacity with a strong focus on customer service, attention to detail and exceptional value. We are the only research and strategy firm that helps organizations respond to the disruptive risks and opportunities in a world where demographics and technology are changing more quickly than ever. To learn more visit: abacusdata.ca.

I urge you all to take the time to read the 2021 Canadian Employer Pension Survey results here as well as the 2021 Canadian Retirement Survey by Abacus Data here. 

For those of you who want to go directly to links, read the executive summary here and full presentation here.

Yesterday, I had a chance to catch up with Steven McCormick, SVP, Plan Operations at HOOPP to go over the findings. 

Let me begin by thanking him for taking some time to discuss the findings and also thank James Geuzebroek, Senior Manager, Media and Public Affairs, for setting up the call and sending me material ahead of time (on an embargoed basis, of course).

I asked Steven what stood out for him in the employer pension survey and he said three things: 

1. Canadian businesses are optimistic: While the pandemic has been difficult for many Canadian businesses, respondents to this survey were optimistic about the post-COVID future and half plan to increase their employee headcount.Steven noted that overall more than eight-in-ten (85%) entrepreneurs are optimistic beyond 2021, and nearly half predict growing their employee base over the next year. This bodes well for the economy.
2. Alignment of interest between employee and employer survey on retirement security: If you look at the 2021 Canadian Retirement Survey which I covered here, you will see there's an alignment of interests between employees and employers on retirement security. Steven noted this and said it's nice to see employers realizing that apart from compensation, retirement benefits are also a critical part of attracting and retaining qualified employees. 
3. Businesses with a retirement plan saw a productivity improvement over the last 18 months: And this, despite the pandemic. Among companies offering any sort of retirement benefits, 44% say employee productivity has been better than normal over the past year while only 18% say it has worsened. This is significantly better than employee productivity within companies not offering retirement benefits; 29% say productivity has improved, while 23% say it has worsened. Steven explained it like this. First, employees with a retirement plan are less stressed, which explains why they are able to focus more on their work. While all benefits are good, retirement benefits in particular are associated with a marked improvement in productivity. Importantly, the more robust the retirement savings program, the more likely employers were to report improved productivity. 

Now, being an economist, I realize that last part about improvement in productivity being related to the robustness of the retirement savings program might sound "spurious" or "soft" to some, but we have come a long way since my days of studying economics at university and behavioral economics teaches us that there's definitely a relationship between productivity and less financial stress. 

"Rubbish! Most employees in third world countries have no retirement savings program, are stressed like hell and they're very productive, working 15 hours or more a day to make ends meet."

Well, I'm not sure that's the model we should aspire to emulate and I am glad Canadian employers realize the link between stress and productivity:

In my opinion, this is the most telling slide of the survey, showing a clear link between productivity and the robustness of retirement benefits:

 

This is why we need to improve access to better retirement savings plans, it will bolster our economy over the long run.

Steven told me beyond access, we need to promote retirement security at the workplace and "bring everyone to the table" to discuss this important policy debate. 

"More retirement security means less social welfare spending, more consumer spending, more government revenues and higher productivity which are all good for the economy over the long run."

I couldn't agree more and even though my political and economic leanings are right-of-center, when it comes to retirement security and pension policy, I'm downright blunt and unapologetic: stick to what works and what works in Canada are large, well-governed defined benefit plans.

Those are my views, not Steven's or HOOPP's as they just want to see more businesses adopt any retirement savings plan, which is understandable and more practical and feasible. 

I told Steven that I recently covered a position paper by Serge Charbonneau and Joseph Nunes of the Canadian Institute of Actuaries on protecting pensioners of traditional defined benefit (corporate) plans, and shared this at the end of that long comment packed with actuarial insights:

[...] I'd like to see the creation of another (alas!) large, well-governed federal public pension fund  that amalgamates all the assets of Canadian corporate defined-benefit plans, offloading the risk of these plans from companies to the federal government's balance sheet.

"Well, Leo, how Trudeau-esque of you, that's all we need, another large Canadian pension fund backstopped by the federal government."

Hear me out. There's no arguing that Canada has some of the best, if not the best pension investment managers and pension plans in the world. 

We got the governance right, the risk-sharing right, the approach right allowing these pension managers to run their operations internally, significantly reducing costs.

In other words, why are we trying to tinker with policy to ensure every member of a corporate defined-benefit plan can retire in dignity and security?

Let's focus on what we know works well and do the right thing over the long run.

Steven told me he read that comment and said he likes how I "think big" but what they are trying to do is advance the discussion on retirement security in a meaningful way given the constraints we face in policy.

He added: "I'm all for cost-effective retirement plan but having no plan whatsoever is very costly for our society. More and more employees and employers are expressing serious concerns about a looming retirement crisis, individuals can't do it alone. In a post-COVID world, we need to rebuild in a better way and we can't ignore this problem."

I totally agree, we need to rebuild in a better way and we need to start looking at outcomes based policies. What is in the best interest of all Canadians, not just the lucky few working in the public sector that enjoy a defined benefit plan?

Again, I'm a stickler for large, well-governed public pension plans backed by provincial and federal governments.

"Yeah but Malcolm Hamilton says there's a cost to that and it's backstopped by taxpayers."

Never mind, I love Malcolm, think highly of him, but if this pandemic taught us anything, it's this: where there's a will, there's a way, if you build it, they will come!!!

I'm tired of cynics and critics, let's think big and act big when it comes to retirement security and adopting meaningful pension policies. 

In the meantime, we absolutely need to advance the policy discussion and I look forward to HOOPP's  third retirement approach project coming this November.

I thank Steven McCormick for another great discussion and I urge everyone to dig deeper into the 2021 Canadian Employer Pension Survey results by downloading the executive summary here and full presentation here. All their retirement research can be found here. 

Lastly, before I forget, last night I received an email from Derek Dobson, President and CEO of CAAT Pension Plan, as I asked him his thoughts on the Serge Charbonneau and Joe Nunes paper which I covered here. 

Derek is a top actuary and here is what he shared with me:

I will not opine on the actuarial and legal merits of these proposals. Your blog has covered the different views of these thoughtful actuaries very well.

If protecting promised private sector DB pensions by leveraging a high-performing well-governed public sector plan is the goal- as Joe Nunes mentions - the CAAT pension plan is already doing this through its DB pension merger process.

CAAT has accepted DB pension mergers from many single employer private sector and nonprofit sector DB plans, including Torstar, Postmedia, Royal Ontario Museum, Youth Services Bureau, Community Living Toronto, United Way of Greater Toronto, Catholic Charities, and the Winnipeg Free Press. In addition, DB members from Sanofi, St John Ambulance, Globe and Mail, and the George Hull Centre have overwhelmingly consented to a merger with CAAT and we are working with the regulators to complete the asset and liability transfers.

Since CAAT is a not-for-profit Trust Fund who doesn’t have a profit incentive and uses a going concern pricing approach for mergers – it is often the optimal solution for protecting 100% of the promised pension. To be clear, members’ pensions will be paid in full by CAAT even if their employer ceases operations. In addition, most merger members are now receiving CAAT’s conditional inflation protection increases on their prior pensions (something they didn’t have before the merger with CAAT).

Our interactions with over 10,000 DB merger members have clearly demonstrated that pension security and receiving 100% (or more) of their promised pension is very important to all members, regardless of age and income. Our average member endorsement rate for mergers is 97% – from the very young contributing member to pensioners nearing 100.

CFOs are champions of CAAT mergers too, since volatile DB pension liabilities are removed from the balance sheet following the merger. For many employers, having a cleaner balance sheet has opened up capacity for investing in their core business, which is also benefits employees and shareholders. CAAT offers a simple and effective solution without creating additional employer premium costs or cross subsidies.

Quite simply, as Joe mentioned, an effective solution to private sector pension security already exists and is working well for mergers that occur before a bankruptcy event.

The CAAT solution also avoids passing risk to Canadian taxpayers – who most (sadly) do not have a defined benefit workplace pension. CAAT is also working on that important issue by offering DBplus to Canadian workplaces. CAAT now has 183 employers participating in DBplus which is amazing since it has only been offered since 2019.

As a quick refresher, DBplus provides secure predictable lifetime DB benefits that members want and need at a fixed cost that employers can afford. CAAT’s DBplus won the pension design innovation award at the World Pension Summit in 2018.

I would be happy to connect with you to talk about some of the other innovations CAAT is working on to enhance retirement income security for Canadians.

What Derek and the entire CAAT team are doing in terms of growing DBplus so more employers in Canada can offer their employees the peace of mind that comes with a well designed, well governed DB plan is nothing short of astounding. 

I urge al employers regardless of if they have a DB, DC or Group RRSP plan to take a hard look at CAAT's DBplus here. 

I also urge employers in Ontario's non-profit sector to look at OPTrust Select here as it too offers the peace of mind that comes with a well governed defined benefit plan.

Unfortunately, HOOPP doesn't offer its pension management services to private employers because if it did, I'd recommend them too!!

By the way, the CAAT Pension Plan just launched a new business-related podcast, Contributors, aimed at Canadian leaders. Contributors is a podcast about building Canada’s future – today. 

In each episode, CAAT’s Marnie Niemi Hood, Vice President of Pension Solutions, and Russell Evans, Vice President of Communications, sit down with a broad cross-section of leaders or experts in their fields to discuss how their organization is advancing change in Canada while also prospering by prioritizing more than just the bottom line. Their first episode is available here and covers this:

Marnie and Russell had the pleasure of sitting down with Paula Allen, Global Leader and SVP of Research and Total Wellbeing at LifeWorks, to dissect the challenges Canadian employers and employees are facing during the pandemic – and more importantly, the opportunities to help them come out stronger. Tune in to the episode to learn about new research released by LifeWorks and Deloitte Canada, which reveals that the state of mental wellbeing at organizations across all sectors, particularly among business leaders, is compromising a post-pandemic workplace recovery. Hear from Paula about how leaders can overcome these challenges and thrive in a new workforce.

Watch it here and I hope they upload them to YouTube so I can embed them in the future. 

Below, learn about how CAAT DBplus member’s contributions work to provide a secure lifetime pension and other valuable benefits.

Also, Canadians are attracted to a workplace that offers a valuable defined benefit pension. Watch to learn more about how employers benefit from CAAT DBplus.