HOOPP and Angus Reid's 2022 Canadian Employer Pension Survey

Gigi Suhanec of the National Post reports on how bosses are trying to address employees' workplace trauma either through cash or retirement benefits:

Employers are carrying around a lot of angst about their employees and think higher pay is the immediate answer to those worries.

Most would think inflation would be the stand-out issue for employers in these tough economic times. But increased competition for hiring is running neck and neck with the elevated cost of living as the top concerns for 82 per cent of employers, a new survey by the Healthcare of Ontario Pension Plan (HOOPP) and pollster Angus Reid said.

Employer concerns regarding their staffers don’t end there: 79 per cent also ranked burnout and labour shortages as pain points, while 77 per cent rated high turnover as another major workplace preoccupation. HOOPP and Angus Reid surveyed 778 Canadian business owners and leaders with 20-plus employees for its annual Canadian Employer Pension Survey.

Digging into their employees’ psyches, 87 per cent of business owners said they were also worried that the people who work for them are experiencing “financial stress resulting from inflation,” while 81 per cent were concerned about possible economic instability and 78 per cent worried about the effects of rising interest rates.

With so much on employers’ minds, the survey asked respondents whether “cash in hand” or improving or introducing retirement benefits would be the best solution to tackling all this workplace trauma. More than 67 per cent said they favoured pay increases as a way to lighten the load of inflation, and 71 per cent said higher pay was useful in attracting new employees.

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand,” Steven McCormick, senior vice-president of plan operations at HOOPP, said in a press release.

That doesn’t mean retirements benefits aren’t on employers’ minds.

In fact, the survey found that 84 per cent of employers in the survey are worried about a looming “retirement income crisis.” Three-quarters of them (75 per cent) said they “feel a responsibility to offer a pension plan workers can access in order to have adequate retirement income.”

The report revealed some signs of momentum on the retirement benefits front.

A wide majority (80 per cent) of respondents had some sort of workplace retirement benefits program, the survey found. Almost one-fifth (17 per cent) of employers said they had either recently introduced a pension benefits plan, enhanced the program they had or planned to offer one in the coming year.

“Those that do offer retirement benefits are doing so to respond to employee needs, long-term costs to the company (51 per cent) and competing with other employers (47 per cent),” the report said.

Of the employers that introduced or improved their retirement benefits plan in the last year, 56 per cent said they were more likely to see higher levels of productivity compared to 39 per cent for those companies that hadn’t upgraded their retirement benefits. The report also found that 57 per cent of the former group said they were less likely to experience competition for hiring than the latter (77 per cent).

Of the employers that don’t offer pension benefits, which was 20 per cent of respondents, they cited the costs associated with a program — either long term or in the setup — as a barrier.

“Some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” said Demetre Eliopoulos, senior vice-president of public affairs at the Angus Reid Group. “The survey found some significant correlations between benefits and a happy, productive workforce.”

For now, though, cash in king.

Earlier today, HOOPP put out a press release stating Canadian employers are most worried about staff retention and well-being, but solutions vary amid economic uncertainty:

Toronto (November 3, 2022) – The top concerns for Canadian employers in 2022 include employee burnout and losing staff, according to the Canadian Employer Pension Survey from the Healthcare of Ontario Pension Plan (HOOPP) and Angus Reid Group. And while employers recognize the value of retirement benefits for addressing these concerns, the current high-inflation environment is driving them to favour wage hikes instead. 

HOOPP commissioned Angus Reid Group to conduct a survey of 778 Canadian business owners and senior leaders with 20+ employees. The results provide an overview of how employers around Canada see the current economic climate’s impact on business, the state of retirement security in Canada, and the ability of retirement benefits to help with employee retention, recruitment and overall well-being. 

“Current inflationary pressures are understandably leading many employers and workers to prioritize cash in hand, even as they recognize the short- and long-term value of retirement benefits,” said Steven McCormick, SVP, Plan Operations, HOOPP. “It is arguably more important than ever for leaders – in business, government and the retirement industry – to take measures that will help workers save for retirement, even when it’s challenging to do so.”

On the positive side, there was evidence in the survey of some momentum towards improved retirement security outcomes. A significant group of respondents (17%) said they had launched or enhanced retirement savings plans in the past year, or plan to do so in the year ahead.

The research showed that employers are optimistic about their businesses’ success over the coming year, with 80% being optimistic about their ability to maintain revenue and profitability. What they’re worried about is employees, with leading concerns being: greater competition for hiring (82%), employee burnout (79%), labour shortage (79%) and high turnover (77%). A strong majority are also worried about inflation (82%).

In addressing these issues, the majority of employers are currently favouring wage increases over benefit enhancements as the best way to mitigate the effects of inflation for employees (67%), and as a means to attract new employees (71%). 

“But some employers may be underestimating the degree to which retirement benefits can serve both their business needs and their employees’ needs,” said Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group. “The survey found some significant correlations between benefits and a happy, productive work force.”

Employers reporting improved productivity are significantly more likely to favour benefits over cash in fighting inflationary pressures and recruiting new talent, compared to those with worsening productivity (45% vs. 31%). Employers reporting improved productivity are also twice as likely to be optimistic about maintaining employee morale (81% vs. 40%), retaining current talent (80% vs. 43%) and recruiting new talent (76% vs. 38%).

These findings corroborate conclusions from 2021 research by HOOPP and Common Wealth – The Value of a Good Pension: The business case for good workplace retirement plans – which showed how offering pensions can improve a company’s bottom line. 

Amongst all respondents, 66% said retirement benefits help retain talent and 62% said they help recruit talent. Most also say retirement benefits are a cost-effective way to reduce financial stress for employees (85%) and more of an investment in human capital than a cost to business (78%).

Most employers (84%) are also concerned about an emerging retirement income crisis and feel they have a responsibility to offer a pension (75%). There is also agreement that governments have a role to play, with 87% saying governments can save money by supporting more affordable and efficient pensions.

McCormick said: “While it is understandable that raising wages is a quicker fix for immediate current economic challenges, there is also widespread understanding of the power of pensions. And it’s encouraging to see there are some employers who are prioritizing retirement benefits as a way of supporting staff.”

These are the findings of a study/survey conducted by HOOPP from August 3 to August 10, 2022 among 778 Canadian business owners and senior leaders with 20+ employees who are members of the Angus Reid Forum. The survey was conducted in English and French. For comparison purposes only, a probability sample of this size would yield a margin of error of +/-3.4 percentage points, 19 times out of 20. See more detailed results here. 

About Healthcare of Ontario Pension Plan (HOOPP)

HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 620 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 420,000 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 and its members.  

About The Angus Reid Group 

Angus Reid is Canada’s most well-known and respected name in opinion and market research data. Offering a variety of research solutions to businesses, brands, governments, not-for-profit organizations and more, the Angus Reid team connects technologies and people to derive powerful insights that inform your decisions. 

Data is collected through a suite of tools utilizing the latest technologies. Prime among that is the Angus Reid Forum, an opinion community consisting of engaged residents across the country who answer surveys on topical issues that matter to all Canadians.

Yesterday, I had a chance to discuss the Canadian Employer Pension Survey with Ivana Zanardo, Vice President, Client Services at HOOPP.

I want to thank Ivana for taking some time to talk to me and also thank Jackie Emick and James Geuzebroek of their Communications for sending me embargoed material beforehand and setting up the Teams meeting and following up with more material.

Before I get into my discussion with Ivana, I think it is worth going over the Executive Summary and conclusion:

Executive Summary

In August of 2022, the Healthcare of Ontario Pension Plan (HOOPP) commissioned Angus Reid Group to conduct its Canadian Employer Pension Survey. This annual public opinion survey captures the perspectives of Canadian employers on the current economic climate’s impact on business, the state of retirement security in Canada, and the positive impact of offering retirement benefits on employee retention, recruitment and overall well-being. 

The results show that employers are very worried about labour shortages, turnover and employee mental health; and they recognize the importance of providing retirement and other benefits to address these challenges. At the same time, immediate pressures stemming from a high inflation environment are forcing many to favour shorter-term solutions to support and attract staff, such as pay raises.

Employers are concerned about external factors like inflation but they are more worried about employee-related factors.

• Leading the pack of concerns are: inflation (82%), greater competition for hiring (82%), employee burnout (79%), labour shortage (79%) and high turnover (77%). 
• Many are also concerned about employee productivity (59%) impacting their business.
• While most are optimistic about their revenue (80%) and profits (80%), fewer are as optimistic about maintaining employee morale (67%).  One in five (20%) employers rate themselves poorly on their ability to find talent.

Employers are concerned about the impact of the current economy on their employees, and many are taking action to address concerns such as burnout and low productivity.

• Most employers are concerned about employees’ financial stress resulting from: inflation (87%), economic instability (81%) and increasing interest rates (78%).
• Among the 83% of employers concerned about employees’ mental health, 47% are taking action and 30% are developing a plan.
• Among the 61% of employers concerned about low productivity, 31% are taking action and 37% are developing a plan.
• Employers overwhelmingly agree it is important to offer benefits that will reduce financial stress for employees (88%).

Employers understand the value of pension benefits on recruitment and retention, whether they have them or not.

• Among all employers (including those that don’t offer retirement benefits), they understand offering retirement benefits helps with retaining (66%) and recruiting (62%) talent. 
• A majority of employers also say retirement benefits are a cost-effective way to reduce financial stress for employees (85%) and more of an investment in human capital than a cost to business (78%).
• Those that do offer retirement benefits are doing so to respond to employee needs (it was rated as the first or second priority for 55%), long-term costs to the company (51%) and competing with other employers (47%).

Employers agree with workers that Canada is heading for a retirement crisis and they believe they have a responsibility to help their workers save for retirement.

• Most Canadian employers (84%) are concerned about an emerging retirement income crisis, which is even higher than the Canadian general public who agree with the same statement (75%*). 
• Implications of the crisis are commonly understood by employers: 
  • 80% say without good pensions in place, the economy will suffer.
  • 84% say if workers aren’t able to access good workplace pensions and contribute during their working lives, they will become a burden on the taxpayer.
• A majority of employers feel a responsibility to offer a pension plan workers can access in order to have adequate retirement income (75%).
• Employers believe that governments have a role to play:
  • 90% believe governments should encourage best practices for communicating the value of retirement benefits.
  • 87% say governments can save money by supporting pensions that are more efficient/affordable.

*Source: 2022 Canadian Retirement Survey

Employers recognize the value of retirement benefits, but currently favour increasing wages to mitigate the effects of inflation for employees.

• A majority of employers (67%) are currently favouring wage increases over improving benefits as the best way to mitigate the effects of inflation for employees, and as a means to attract new employees (71%).
• Cost is the biggest impediment for the 20% of employers that do not offer any retirement benefits. Of this group, 44% say the long-term costs are too high and 30% say set-up costs are too high.
• Only one in three employers say benefits are the best way to mitigate inflation pressures.

Employers who prioritize retirement benefits over cash report higher levels of productivity, including those who introduced or improved benefits over the last year.

• Knowing that over half of employers are concerned about employee productivity (59%), those reporting significantly improved productivity are more likely to favour benefits over cash in fighting inflationary pressures and recruiting new talent, compared to those with worsening productivity (45% vs. 31%).
  • Furthermore, employers reporting improved productivity are twice as likely to be optimistic about maintaining employee morale (81% vs. 40%), retaining current talent (80% vs. 43%), and recruiting new talent (76% vs. 38%).
• Firms that offer defined benefit pensions are more likely to report improved productivity (49%) than firms that do not (36%).
• Seventeen per cent of Canadian employers introduced or enhanced their retirement benefit offerings last year, or plan to in the year ahead. 
  • Those who have introduced or enhanced their retirement benefits in the last year are more likely to report higher levels of employee productivity compared to those who have not made any retirement benefit improvements (56% vs. 39%), and less likely to be negatively impacted by greater competition for hiring (57% vs. 77%), high turnover (64% vs. 71%), and labour shortages (62% vs. 76%).
    

Conclusion

While Canadian employers surveyed are mostly optimistic about the future of their business over the next year, they remain deeply concerned about workforce challenges. Overall, employers understand the benefits of offering retirement plans, particularly when it comes to employee retention and staying competitive in the labour market. 

Employers that offer retirement savings plans also report higher levels of productivity and employee wellness. The link between these is further explored in previous research, The Value of a Good Pension: The business case for good workplace retirement plans. 

There is continued momentum towards addressing employers’ business concerns by improving retirement security for their employees. In fact, one in six (17%) employers either introduced or enhanced retirement benefit offerings last year, or plan to in the year ahead. 

While current inflationary pressures are naturally and understandably forcing many employers (and workers) to prioritize cash in hand now, there is also a strong recognition that a retirement crisis is coming. As such, it is more important than ever for all stakeholders – businesses, government, the retirement industry and workers – to stay focused on the long term and take measures that will help workers save for retirement. 

These findings are based on a survey conducted online from August 3 to 10, 2022 with 778 Canadian business owners and senior leaders with 20+ employees and who have influence over HR decisions. The margin of error for a comparable probability-based random sample of the same size is +/- 3.4%, 19 times out of 20. Sample is achieved in a generally proportional manner from all ten provinces and targets are placed to ensure reasonable representation of businesses across employee count spectrums.

You can download the full presentation here and the executive summary here. 

Discussion with Ivana Zanardo, Vice Presdent, Client Services at HOOPP

As stated above, I had a chance to discuss this latest survey with Ivana Zanardo, Vice President, Client Services at HOOPP.

Ivana began by explaining this survey:

It is an annual public opinion poll that captures the perception of Canadian employers on the current economic climate and the impact it has on their business, on the general state of retirement security in Canada, as well as the positive impact that offering retirement benefits and savings programs has on retention, attraction and general employee well-being. 

So, just to be clear, this is a poll HOOPP commissioned Angus Reid Group to start do every year from now on to look into employers' perceptions on retirement benefits and the economy and more.

This survey builds on HOOPP's advocacy work and it complements the 2022 Canadian Retirement Survey they did with Abacus Data. 

As you can see from the results above, employers aren't only concerned about their employees' financial well-being, they are also concerned about their mental health.  

Ivana spoke about HOOPP's ongoing work on retirement savings:

We have been doing research for the last number of years. We believe it is our responsibility to advocate for good pensions for all Canadians. The other plans in the province of Ontario also believe in the importance of providing good pensions to all Canadians and they all do it a little differently. Some of the other plans have growth initiatives and offer other products. Here at HOOPP, we do it by research and this research is intended to advance national dialogue on the importance of retirement security for all Canadians and the effective way of offering it through workplace savings programs. 

She went on to discuss this latest survey:

The results of this survey showed us employers are worried about the labour shortages, turnover and generalized employee mental health and that offering retirement savings programs have a direct correlation to their productivity and their financial well-being. We also understand the current inflationary environment has some employers feeling forced to offer short-term solutions like a salary increase, but what our hope is that they don't lose sight of the importance and value of offering retirement savings plans as a way to address some of those challenges.

I asked her about these challenges:

The challenges are labour shortages, ability to attract and retain staff and to ensure employees' mental well-being. I think those are the key challenges for employers these days. Our employers have reported to us specifically how important it is for them to include HOOPP in their overall compensation package. As we approach new employers in the province, they tells us they need HOOPP to be competitive.

I totally agree, being part of HOOPP makes a huge difference for employers looking to attract and retain qualified staff and looking our for the financial and mental well-being of their employees. 

I said that part of the problem of offering retirement savings programs is corporations tend to do very crude cost calculations on these programs and think they're expensive (they're not) and don't do a proper cost benefit analysis to understand all the benefits (attraction, retention, increased productivity, less financial stress).  

Ivana shared this with me:

This survey showed us just under 1 in 5 employers plan to offer or plan to enhance their retirement savings programs this year. And the research has told us that employers who have done that -- introduced or enhanced their retirement savings program over the past year -- are less likely to be negatively impacted by the labour shortages compared to those that have not. So offering retirement security directly influences employees' productivity. We know employees are our biggest asset and if they are not stressed or feeling anxious about their financial security, they're more focused at work, they're happier at work which in turn leads to a benefit to our employers.We understand that in today's environment employers want to favor a salary increase but we don't want them to lose sight of the benefit this retirement security has to their business. 

I said the reality is Canadians right now are more concerned about inflation and making ends meet which is why they would likely favor a wage increase over retirement security but over the long run, they have to also be worried about not outliving their retirement savings as many Canadians are living longer in relatively good health. 

When you sit down and talk rationally to people to explain this day and age, it's not uncommon for people to live to 90 years old or more, and if you retire at 65 with modest savings, you risk outliving those savings and being forced to live on a much lower income. 

Ivana told me HOOPP does a lot of communication with its members to help them plan for retirement and that their 2022 Canadian Retirement Survey showed the majority of young Canadians (age 18 to 34) would give up pay to have a retirement savings program. 

She also said that education is important and that's why HOOPP continues to do this research because it's top of mind for employees, employers and governments:

Now, we also know HOOPP is a gold standard plan and we are not suggesting that everyone has to have this type of plan. The research that we launched late last year on the value of a good pension identified 5 key value drivers and I think if employers look at those drivers -- like automatic savings, keeping costs low, fiduciary governance -- as long as they can offer any retirement savings plan, it would be beneficial.

I agreed with Ivana however, I stated my opinion is we should strive for the best and offer all Canadians a defined-benefit plan. 

She agreed with me but said the message to employers is "don't do nothing, if you can't offer a DB plan, do something."

She added: "I feel very fortunate to have a well governed DB plan" (HOOPP employees have access to their pension plan).

We then discussed how many Canadians are using their home as their de facto retirement savings program and I told her how one pension CEO told me this summer he was worried about this trend.

Ivana replied:

We launched research earlier this year that talks specifically about that (using housing as a retirement savings program). You're absolutely right, it would have been a strategy when we were buying houses or may parents were buying houses, but for my kids now getting into the market, it's hard. So then what are they left with if they don't have a workplace savings plan? I have three grown boys in the workforce right now and none of them have a retirement savings plan so I hope one day they will have that security.  

I hope so too and told her there are great initiatives -- CAAT's DB Plus and OPTrust Select --  but more needs to be done to cover all Canadians. 

I spoke about this in my recent comment on the world's best and worst pensions in 2022 going over the hardship seniors and disabled Canadians are living right now. I would encourage you to read this comment carefully.

Ivana shared some final thoughts with me:

We hope that employers don't lose sight about the value of offering retirement savings plans has on productivity, employee well-being and their mental health. And we know that both employers and employees agree that offering these retirement savings plans are good for job attraction. We recognize that inflation is top of mind these days but we don't want employers to lose sight of this. We feel very fortunate to be members of a DB pension plan and we want it to be available to all Canadians. And given the current environment that our healthcare workers are in, we are honored to be in a position to help them with their retirement security.

Alright, let me end it on that positive note and thank Ivana Zanardo once again for a great chat and also thank James and Jackie too. 

Below, Nik Nanos of Nanos Research recently appeared on CTV News to go over results of a recent poll showing Canadians are increasingly worried about the state of the economy. “Realistically, we’re already in a psychological recession” he said. 

No doubt about it, paying the bills is top of mind right now but what about paying the bills later on in life? We need to have policies and strategies that promote better workplace retirement savings plans.