Survey suggests many firms prepared to offer workers pooled pension plans

By The Canadian Press  | January 17, 2012

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OTTAWA - Two-thirds of Canada's small businesses are taking a look at a new pension vehicle unveiled by Ottawa and many would consider contributing themselves, suggests a survey conducted for the insurance industry..

The survey by Leger Marketing on behalf of the Canadian Life and Health Insurance Association suggests 68 per cent of small firms not offering pensions at the moment have interest in the new pooled registered pension plans.

The federal proposal has been supported from the outset by financial services companies, such as banks, insurance companies and asset managers, whiich stand to benefit by charging fees for administering the pooled plans.

The Leger survey is the first indication that small firms may participate in large numbers, although that won't be known until the provinces pass enabling legislation establishing the pooled plans.

The survey also found 73 per cent of those interested in the pooled plans said they would look at ways their firms could contribute to the plans.

The poll of over 800 executives from small and medium-sized businesses across Canada was conducted in the first two weeks of December. It is considered accurate plus or minus 3.5 per cent, 19 times out of 20.

"This survey shows they are extremely interested in participating," said Frank Swedlove, president of the insurance association.

"We're not totally surprised. I think they see it as an opportunity to attract and retain staff."

Snedlove said he believes many firms will also likely contribute to their employees' pensions, which would make the plans more attractive to workers.

When the government announced the idea of pooled plans in the fall, Minister of State for Finance Ted Menzies stressed that over 60 per cent of employees in Canada work for firms that do not offer a company plan.

The scheme allows companies too small to afford a regulator pension plan to offer their employees an option of contributing to a vehicle that "pools" together employees from many firms. The plan would be administered by financial institutions, such as insurance companies, supposedly at a lower administrative cost than pooled RRSPs.

“Basically, Canadians will be able to buy in bulk, buying in bulk means lower prices … lower prices means Canadians will get greater returns on their savings and more money will be left in their pockets when they retire,” he said.

The federal government had looked into the option of expanding the Canada Pension Plan, but decided increasing payroll taxes to pay for it would be bad for the economy.

Critics complained, however, that since the new savings vehicle is strictly voluntary — firms don't have to offer it, and neither employees nor employers have to contribute — the effectiveness of the plan remains in question.