Smaller companies more likely to contribute to group retirement plans
As the economy begins to recover, Canadian employers are increasing contributions to their group retirement plans and more employees are maximizing their contributions to get full employer matching contributions, according to a new report.
The 2009 Capital Accumulation Plan (CAP) Benchmark Report, based on a survey of 264 organizations, found employers contributed 4.6 per cent of salaries to their defined contribution (DC) pension plans in 2009, up from 4.5 per cent in 2008.
The report, from The Great-West Life Assurance Company, also found employers contributed 4.3 per cent of salaries to their group registered retirement savings plans (RRSPs) in 2009, up from 3.9 per cent one year earlier.
“This research clearly illustrates how robust employer-sponsored retirement plans are in Canada,” said Bill Kyle, senior vice-president of group retirement services at Great-West Life.
The benchmark report also shows more employees are maximizing their DC pension plan contributions. Eighty per cent of responding employers with DC pension plans said plan participants maximized their contributions so they can get full employer matching, up from 75 per cent in 2008.
For group RRSPs, 82 per cent of plan participants were reported to be maximizing their contributions, up from 75 per cent one year earlier. Among firms with fewer than 100 employees, 91 per cent reported their employees maximized their contribution in order to optimize matching contributions from their employer.
"Canadian employers make significant commitments to group retirement plans and that employees value this benefit by taking maximum advantage of employer matching programs," said Kyle.
More than 50 per cent of private sector workers now enjoy retirement plans at work, with more than 70 per cent of this coverage being provided by CAPs, he said.
Other findings in the report:
• 46 per cent of respondents said the company contributed to their group RRSP, up from 32 per cent in 2008.
• 70 per cent of employers with less than 100 employees made contributions to the group RRSP, while 67 per cent of employers with 100 to 199 employees make contributions.
• Employees contributed an average of 4.5 per cent of salary to their DC pension plan in 2009, up from 4.2 per cent in 2008.