TORONTO, Oct. 31, 2023 (GLOBE NEWSWIRE) -- As businesses continue to cope with inflationary pressures, employers choosing to offer higher pay in lieu of retirement benefits risk falling behind those already offering those benefits – and they could be at odds with what Canadian workers want, according to the 2023 Canadian Employer Pension Survey from the Healthcare of Ontario Pension Plan (HOOPP) and Angus Reid Group. At the same time, a growing number of employers are turning to benefits, including pensions, to address a challenging labour market and improve employee retention and productivity.
The annual survey of 754 Canadian business owners and senior leaders with 20+ employees found employers who don’t offer retirement benefits may not be fully aware of their employees’ views on pensions, as 77% believe their employees would choose a higher salary over a pension. In fact, previous HOOPP research has found that almost two-thirds (61%*) of Canadian workers would prefer a pension over a pay hike.
“Workers may want pensions even more than their employers know,” said Ivana Zanardo, Head of Plan Services, HOOPP. "Employers want to remain competitive in a difficult labour market and it's easier to stay ahead if you understand, and can offer, what the workers you're trying to attract and retain are looking for in terms of compensation."
A significant majority of employers expressed concern about the negative impact of greater competition for hiring (77%), a labour shortage (75%) and employee burnout (73%) on their organizations. At the same time, the survey results highlight several advantages associated with offering retirement benefits – especially when compared to those who don’t offer them:
58% of employers who added or improved retirement benefits in the last year report higher than usual productivity, compared to just 34% of employers who don’t offer them.
Employers offering retirement benefits are two times more likely to say their employees can retire at or by age 65 (80%) than those who don’t offer them (42%).
Employers who offer retirement benefits consistently rank retention (64%) and recruitment (59%) as the top benefits of doing so.
Most employers are concerned about the effects of inflation (86%) and rising interest rates (82%) on their employees’ financial stress. In fact, employers are more concerned about the impact of these two factors on their employees than their impact on the business itself. At the same time, 90% of employers agree it’s important for businesses to offer benefits that will reduce these employee stresses and a majority (82%) cite retirement benefits as a cost-effective way to do that.
“We’re seeing an interesting trend in employers’ priorities,” said Demetre Eliopoulos, Senior Vice President, Public Affairs, Angus Reid Group. “We are seeing employers worry more about the impact of rising inflation and interest rates on their employees’ financial stress than on their organization. They also agree that employees who experience less financial stress have better mental health and wellness. If employers can help alleviate that stress – and retirement benefits are seen as an effective way to do that – it would be good news for their employees and in turn, their business.”
Yet even as more employers see the value in offering retirement benefits, employers who don’t offer them may increasingly underestimate it: three-quarters (73%) of employers who offer retirement benefits agree that they improve employee productivity compared to only half (52%) of employers who do not offer them.
Rising momentum for retirement benefits
As more employers start to see the value in offering retirement benefits, the number of employers who plan to introduce or enhance their retirement benefit offerings this year or next has increased to 23%, up six points from 2022.
There’s also been a positive shift in the percentage of employers who say they prefer to improve benefits to attract talent in a competitive labour market (34%, up five points), rather than increase pay (66%, down five points).
For those employers not offering retirement benefits, they cite cost (56%), limited resources (39%), and a preference to offer higher salaries or other bonuses (30%) as reasons why.
However, among all employers, one thing is clear. As the majority (84%) remain concerned about an emerging retirement income crisis, employers understand the important role workplace pensions play for businesses, government, taxpayers and the broader economy:
82% agree that without access to good pensions, workers will become a burden on the taxpayer.
79% agree that without good pensions in place, the economy will suffer.
76% agree that businesses have a responsibility to offer a pension plan that workers can access to have an adequate income in retirement.
“It’s encouraging to see momentum continue to build for retirement benefits,” said Zanardo. “The hope is that dialogue between businesses, government, the retirement industry and workers will help employers overcome obstacles to offering retirement benefits. Greater access to retirement benefits could help give employees long-term stability in an ever-changing economy, while helping employers experience the well-documented improvements to recruitment, retention and productivity that come with them.”
These findings are based on a survey conducted online from August 7 to 17, 2023 with 754 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 +/- 3.5%, 19 times out of 20. Sample is achieved in a generally proportional manner from all 10 provinces and targets are placed to ensure reasonable representation of businesses across employee count spectrums. See more detailed resultshere.
HOOPP serves Ontario’s hospital and community-based healthcare sector, with more than 630 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 435,000 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 on 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.
